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Great news for mobile payments: the Federal Reserve says the percentage of consumers using a smart phone to make a purchase at the point of sale grew nearly threefold last year. Not-so-great news: don’t rely on that figure, because it’s too small to be statistically significant.
Those and other new data about mobile payments and banking can be found in a study the Fed released last week called Consumers and Mobile Financial Services 2013. Results of the study, the Fed’s second such effort, are based on a November 2012 online survey for the central bank by GfK (formerly Knowledge Networks). Nearly 2,600 respondents completed the survey.
The results tend to deflate the hyperbole surrounding mobile payments while still offering hope that many consumers eventually will use mobile phones as replacements for payment cards and cash. The user base today is still quite small despite the intense development of new mobile payment services by tech companies, processors, banks, and a few retailers such as Starbucks Corp.
For example, 6% of survey respondents reported waving or tapping a mobile phone at a cash register last year to make a purchase. That’s great news compared with just over 2% of respondents who reported doing that in the first survey, for 2011. The Fed warns, however, to treat the 2012 results with caution. “The small number of respondents who make this type of payment means that the change in use from 2011 to 2012 is not statistically significant,” the survey report says. A Fed spokesperson did not return a Digital Transactions News call for comment.
In addition to POS purchases, the survey asked about other forms of mobile payments such as bill payments, charitable donations, person-to-person payments, and other other forms of payment using a mobile phone. Researchers also asked about the technology respondents used for mobile payments, including Short Message Service (SMS) or text messaging, mobile browser, and mobile applications.
In all, only 15% of respondents had made any form of mobile payment in 2012, up from 12% in 2011. Among them, the most common form of payment was bill payment, at 42%, followed by online purchases at 35%. The percentage of mobile payers making those two types of payments actually declined slightly from 2011, but those making P2P payments increased to nearly 30% from 21% in 2011. Fifteen percent of respondents reported receiving money last year from another person via a mobile phone, up from 8% in 2011. Only 2% of mobile-payment users reported using Google Inc.’s Google Wallet and a similar fraction said they had used Square Inc.’s Pay With Square, now known as Square Wallet.
Survey takers asked those who did not make mobile payments to chose one or more of a dozen reasons listed for not doing so. The most frequently cited reason, picked by 38% of the group, was, “I'm concerned about the security of mobile payments,” followed by “it’s easier to pay with another method,” 36%; “I don't see any benefit from using mobile payments,” 35%; and “I don't have the necessary feature on my phone,” 30%.
Not surprisingly, the Fed reported that younger consumers are adopting mobile payments faster than other age groups. Respondents ages 18-29 accounted for only 21.6% of the survey base but 38.1% of those reporting having made a mobile payment last year. Consumers ages 30-44 represented 27% of respondents but 32.3% of mobile payers. Older groups were underrepresented: consumers ages 45-59 comprised 27.1% of the respondent base but only 15.9% of mobile payers; respective figures for consumers ages 60 and up were 24.3% and 13.7%.
The Fed found little correlation between income and mobile-payment use, except at the opposite ends of the income scale. Consumers making less than $25,000 a year (23% of the respondent base) were less likely to have reported making a mobile payment last year (16.7%), while 28.4% of those making more than $100,000 reported having made a mobile payment despite comprising only 24% of the survey group.
The Fed also found that mobile-payment adoption by education level was roughly proportionate to its representation in the mobile-phone user population. But minorities were more likely than non-Hispanic whites to make mobile payments.
Full survey results can be accessed here.
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