The Green Sheet Online Edition
December 12, 2016 • Issue 16:12:01
The Mobile Buzz:
Mobile payment awareness inches forward
According to a survey conducted by Accenture Research, regular use of mobile payments remained flat at 19 percent, while mobile payments awareness increased to 56 percent, up 4 percent from last year. The survey also revealed that 60 percent of North American consumers still use cash at least weekly to make purchases at merchant locations, down 7 percent from 2015 and marking the most significant decline in tracking history.
For the report, 2016 North America Consumer Digital Payments Survey: The Edge of a New Frontier, Accenture surveyed more than 4,000 U.S. and Canadian smartphone users regarding how they want to pay now and in the future. Although cash payments have declined, cash and plastic still dominate, with debit card payments at merchant locations holding steady at 58 percent and credit card usage up 3 percent, at 53 percent for 2016.
"We are seeing a gradual increase in consumer awareness of mobile phone payments options; however, adoption has remained flat over the past few years," said Robert Flynn, Managing Director of Accenture Payments in North America. "Consumers are content to use cash and plastic for their everyday transactions, and while the use of cash is declining overall, it is the most commonly used form of payment – and consumers expect it to remain so in 2020."
No real problem to fix
Accenture confirmed what others have speculated, that mobile payment offerings have yet to compel consumers to switch from traditional payment methods. "The existing system isn't broken, which is why consumers are not making a mass-move to mobile phone payments adoptions – the incentives are not there yet," said Michael Abbott, Managing Director of Accenture Digital Financial Services, North America.
While mobile payments have been slow to take off, alternative digital payment methods have steadily gained momentum. Use of PayPal, for example, has increased 4 percent in the past two years to 18 percent, Accenture noted.
Many believe mobile payments are still nascent. "Today's mobile phone payments options provide basic, first-generation functionality; it's like running an Atari game on an Xbox system – amazing underlying potential, but only providing a very basic offering," Abbott stated.
Accenture's survey identified several barriers to adoption. Of the 64 percent surveyed who have never used mobile payments, 37 percent said they had not done so because they are currently satisfied with cash and plastic to meet payment needs. Another 21 percent were uncomfortable registering payment credentials into their smartphones, and 19 percent were concerned unauthorized transactions might occur using mobile schemes.
As for trust, Accenture found that 73 percent of North American consumers trusted traditional card providers to provide mobile payments; 63 percent trusted alternative payment providers like PayPal; 62 percent felt comfortable with established retail banks, followed by large tech companies at 59 percent.
Unique, differentiated offerings required
A number of banks have already deployed mobile payments in tandem with mobile banking apps, and of consumers surveyed who have used mobile payment apps in store, respondents most frequently chose to use their bank's mobile app, which comprised 26 percent of mobile payment users; 76 percent indicated satisfaction with the experience.
Still, more needs to be done to attract users. "Consumers expect more in today's fast-paced digital environment; just the ability to tap-and-pay is not enough," Abbott said. "Payments providers need to bring the traditional card to life and create a real-time interactive experience for consumers."
This is especially true for early adopters, who tend to be millennials and people earning $100,000 and above annually after taxes, Accenture noted. It found that 52 percent of those surveyed in both segments considered themselves early adopters of technology. In the wave behind early adopters, 20 percent of consumers overall expressed interest in using smart devices to initiate payments.
"Millennials and higher-income individuals may be low-hanging fruit for payments providers looking to increase adoption, but there is also a vast amount of untapped opportunity with consumers who are becoming more familiar with digital technologies and the rewards and convenience it affords," Flynn said. "As open banking becomes more prevalent, driven by APIs, consolidated customer data will provide a full picture of the customer, giving payments providers the information they need to create unique and differentiated offerings."
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