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Friday, October 4, 2019

U.S. slow to adopt mobile payments

Consumer concerns about privacy and security have slowed mobile payments adoption in the United States, according to a new study. The Pew Charitable Trusts found ecommerce has grown three times faster than traditional payment cards and transactions initiated on smartphones. Survey data was based on 1,178 consumers who paid by smartphone in 2018.

"Although 88 percent of Americans who conducted a financial transaction had a smartphone capable of making a mobile payment in 2018, mobile payment adoption has lagged [behind] industry projections, and consumers still tend to opt for traditional cards not linked to a mobile platform," researchers wrote.

"It has been the year of mobile payments for about 10 years now," said Katherine McClure, director, partner business development at PPRO. "Payments innovators must recognize that not all technology fits into people's lives, and consumer behavior is not driven by payments."

Generational influence

McClure observed younger consumers are generally more receptive to mobile payments. "Kids look at their phones all the time, she said. "For them, the mobile device is not an invention, but an extension of themselves. They have never known life without a Samsung Galaxy or iPhone."

McClure further noted that U.S. consumers have grown up with dial-up, DSL and desktop computer technology, while in other parts of the world, someone's first computer was a phone. PPRO's Payments Almanac shows Asia has 47 percent smartphone penetration and only 15 percent credit card penetration, she added. Throughout the region, 55 percent of ecommerce is completed on a mobile device. WeChat and Alipay emerged out of social networks in China.

People may be aware that smartphone payments tokenize their personal account numbers but still hesitate to pay by phone due to concerns about privacy, data exposure or reluctance to change shopping habits.

"Consumers think twice about shopping at a store that has been breached but think nothing of a restaurant server who disappears for 10 minutes with their credit card," McClure said. "The card brands are doing a good job of protecting consumers, but this hasn't always been the case. Younger people haven't lived through the hardships of account takeovers; older consumers tend to be more cautious and vigilant."

Security perceptions versus reality

Potential loss of funds during or after a mobile payment transaction was a top concern among Pew survey respondents. When choosing from several payment options, they "sometimes or always avoid mobile payments for fear of loss of funds, most commonly related to mistrust or a high level of discomfort with either their phone or the merchant," researchers wrote.

Additional concerns included distrust of mobile apps, specific merchants, public venues outside of a secure network and the internet in general. One respondent stated, "I typically only make financial transactions at home on my secure network," and another was equally apprehensive about using public Wi-Fi networks, stating, "It may be convenient to some people, but I don't trust the security of sending money through Wi-Fi on my smartphone."

Pew researchers concluded consumers will continue to gravitate toward mobile payments while choosing other methods in certain circumstances. "Even though nearly 30 percent of mobile payment users sometimes avoid them, few discontinue using them altogether: 84 percent of those who used a mobile payment in the past 12 months also used one in the past month," they wrote.

A full copy of the report is available at www.pewtrusts.org/en/research-and-analysis/issue-briefs/2019/10/are-americans-embracing-mobile-payments. For more information about the PPRO Almanac, visit: legacy.ppro.com/almanac/login. end of article

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