The Green Sheet Online Edition
September 14, 2015 • Issue 15:09:01
Cash growth eclipses mobile payments
A new research paper from the ATM Industry Association revealed that mobile payments are doing little to displace cash payments. "In truth, cash use is more robust and mobile payments less stellar in growth than current conventional wisdom might suggest," said Mike Lee, Chief Executive Officer at ATMIA
ATMIA commissioned Tremont Capital Group Inc. to research the payments ecosystem in the United States and abroad. What the researchers discovered was that between 2009 and 2013 average yearly growth in cash overall exceeded economic yearly economic growth rates by a factor of three. "An analysis of 30 countries during [the study period] showed an average year-on-year increase over this period of cash in circulation of 8.9 percent compared to economic growth rates below 3 percent," Lee stated.
Lee added that while mobile payments are catching on, it's a slow go, with just a small fraction of in-store payments made today using mobile devices. Over the next five years, to the extent mobile payments do grab share from more traditional payment methods, it's apt to be from electronic payments, not cash, he predicted.
The ATMIA paper examined successful mobile payment programs, like Apple Pay, and the Starbucks closed-loop program. It noted that despite promising stats from Starbucks – 20 percent of sales at company-owned stores are completed using its mobile app, for example – its mobile pay program pales in comparison to Apple Pay, which claims at present 700,000 acceptance locations.
While mobile payments may not yet be a top priority, there is no denying the proliferation of smartphones has made a mark on American lifestyles. A new report from Bank of America Corp. details how important these devices are to consumers.
Nearly four in 10 (38 percent) of U.S. adults never disconnect from their smartphones, and only 7 percent shut down their devices entirely while on vacation, according to the second annual Bank of America Trends in Consumer Mobility Report.
Eighty-nine percent of adults check their smartphones at least several times a day, and 36 percent said they constantly check their phones. More than half of those surveyed (1,000 randomly selected from throughout the country in April 2015) describe mobile or online banking as their preferred channels; less than one-third (6 percent of millennials) complete the majority of their banking transactions at branch offices. And among consumers using mobile banking apps, 63 percent use mobile check deposit services, and 81 percent use mobile banking alerts.
"We recognize how essential smartphones are to everyday life, and banking is no different," said Michelle Moore, Head of Digital Banking at BofA.
Mobile catching up with ATMs
Meanwhile, the American Bankers Association released survey results indicating consumers use mobile devices to access banking services almost as much as they use ATMs. The ABA hired Ipsos, an independent market research firm, to survey 1,000 adults in July on their banking preferences. This was the seventh such survey in as many years of consumers with bank accounts.
Among those surveyed this year, 32 percent said they use the Internet more than any other channel to access their banks. Branches are the preferred channel for 17 percent (down from 21 percent in 2014). ATMs are preferred by 13 percent (14 percent in 2014) and mobile access is the top choice for 12 percent of consumers surveyed this year (up from 10 percent in 2014). Seven percent of consumers told Ipsos they prefer to bank by mail, and 5 percent said they prefer telephone banking.
"Mobile banking's popularity will continue to grow as banks enhance their mobile functionality and make it easier for consumers to access their accounts anytime and anywhere," said Nessa Feddis, ABA Senior Vice President and Deputy Chief Counsel.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.