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What’s really holding back in-store mobile payments?

“Cashless made effortless!” “Turn your phone into your wallet!” “It’s not exactly magic, but it feels that way!”

The clear message that mobile wallet purveyors are sending to the market is that mobile payments are easy. So why is adoption so low? According to our 2017 FutureBuy® report, only 25% of US shoppers have made an in-store mobile payment in the last six months.

Reasons for low adoption

One obvious stumbling block is availability. A recent JP Morgan Chase study suggests that only 36% of retailers currently accept mobile payments. But availability alone cannot account for this disappointing level of adoption. Smartphones are omnipresent in consumers’ lives — and, as our 2017 FutureBuy study shows, US consumers equate smartphones with shopping; 39% say, “My mobile device is quickly becoming my most important shopping tool,” up 11% since 2016. In fact, CNET reported that smartphones accounted for 21% of online sales on Cyber Monday, with US shoppers spending $1.59 billion using their phones — a new record. So where is the comparable mobile in-store spend?

Our recent research points to one important barrier for consumers: security. With data breaches at Equifax, Yahoo, and even the IRS making headlines, it is no surprise that security is on the minds of consumers. Research from GfK Consumer Life quantifies this anxiety:

  • 36% of Americans are always concerned about their safety and security (2017)
  • 48% of Americans feel it’s very important to actively manage their online identity and personal information (2016)
  • “Personal information getting into the wrong hands” is the #9 concern among Americans from a list of 21 concerns — up 4 places since 2016 (2017)

Looking more specifically at payments, cash still plays a big role – and one of its key benefits is anonymity. Among Americans with household incomes of $75,000 a year and greater, 55% say they always or sometimes use cash to protect their identities. Those in the payments industry know that using a mobile wallet is probably the safest way to pay; but US consumers do not perceive things that way. When we asked which non-cash method of payment was most secure, mobile wallets came in last, with just 4% of consumers (compared to 21% saying swiping their card, and 70% saying EMV).

Opening the door to mobile payment usage

Comfort with financial services and knowledge of the products and services seems to play a big role in opening the door to mobile payment usage. Again, looking at our FutureBuy study, we see significant differences in attitudes towards mobile payments when we compare Leading Edge Consumers (LECs) to the general public. The LEC group consists of three different types of shoppers; Early adopters, Influentials and Passionate shoppers.

15% of respondents in the 2017 FutureBuy study were identified as LECs – and they are much more apt to see mobile payments as secure:

Making payments with mobile device is more secure than other methods” — 57% LECs vs 23% general public.

“I am confident that my mobile device payments are 100% secure” — 58% LECs vs. 23% general public.

Not coincidentally, LECs use of mobile payments in-store over the last 6 months dwarfs that of the general public, 50% to 25%.

Perhaps, the messaging at the top of this post needs to be revamped. Easy is not doing it. While security is often buried in promotional content to some degree, elevating this message to the first position could be a key to quicker adoption. The message of “the safest way to pay” may be the path forward for mobile payments.

For more information, please contact Keith Bossey at keith.bossey@gfk.com.

Download our whitepaper on putting consumers at the center of Financial Services innovation

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