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PIN wins in consumers' expected mobile wallet experience

November 12, 2013 by Dan Kramer — Senior Vice President, Marketing & Merchant Servic, SHAZAM

A recent study by Phoenix Marketing International highlights a disconnect between consumers' awareness of mobile wallets and their use of this emerging payment option.

Phoenix surveyed 3,013 consumers, asking about cardholder attitudes, use, interest, and preferences regarding mobile wallet apps. Although 70 percent of smartphone owners surveyed were aware of mobile wallets, only 20 percent indicated interest in using one. Forty-one percent said they were unlikely to use a mobile wallet app and 39 percent claimed to be neutral about the technology.

Non-smartphone owners were even less interested, with 62 percent reporting that they would be unlikely to use mobile wallets.

Survey participants were asked to imagine the conditions under which they would use a mobile wallet. Forty-nine percent stated a preference for using PIN-based authentication rather than near field communication chips or quick reference codes.

“Although the market is in the early stages of development, consumers clearly prefer to enter a PIN at the merchant terminal or on their smartphone,” wrote Greg Weed, director of card research at Phoenix. “Overall, cardholders preferred PIN over NFC and QR codes by a 3-to-1 margin, likely due to greater familiarity with PIN technology.”

Cardholders gave a nod to financial institutions as a trusted provider of new payment technology. Seventy-two percent of likely mobile wallet users said they would consider a mobile wallet offered by their FI. Just 40 percent would look to Amazon or PayPal as a provider.

Although this study highlights the fact that consumers have been slow to embrace mobile wallets, it also demonstrates that FIs are the frontrunners when it comes to consumer trust.

Community FIs have an opportunity to reach out to those consumers who are considering adopting this new technology. Providing education and a quality mobile wallet platform could allow enterprising FIs to position themselves as a “first mover” with this up-and-coming payment option.