Digital Transactions Authoritative, insightful and timely information for payments professionals
This month, as we do every May, we present a catalog of startups and services from established players that collectively represent the world of alternative payments—payments services that offer an alternative to the four big, general-purpose card brands. As you peruse this year’s entries, you’ll be struck by how many are related in one way or another to mobile technology. Indeed, we could rename this feature the “Field Guide to Mobile Payments,” and have contemplated doing so in the future.
So you might be forgiven for concluding that the long-heralded age of mobile is upon us—that payment via mobile device is no longer the next big thing but is now the reigning technology in payments. Not so fast. As it turns out, mobile still has a long way to go.
The reason isn’t far to seek. Payments strategists may talk about barcodes, near-field communication, tablets, and wallets all they like, but, as in any business, it’s the consumer who disposes. And, if a recent Federal Reserve study is any indication, the consumer isn’t sold on mobile payments. As we report on page 6, the Fed surveyed 2,600 consumers in November and found that 6% had used a mobile device to make a point-of-sale payment last year. While that’s up from a tad over 2% in 2011, the near tripling in usage didn’t impress the Fed.
“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,” says the report, issued late in March. In other words, for all the investment of time, talent, and money in such whizbang technologies as mobile wallets and NFC, the user base for mobile payments remains microscopic.
Nor is the picture much brighter for other forms of mobile transacting. Only 15% of consumers had made any type of mobile payment last year, up just three ticks from 12% in 2011. Interestingly, bill payment was most popular, used by 42% of those who had made a mobile transaction, followed by online purchases at 35%.
The biggest reason (38%) for desisting from mobile is a perceived lack of security. But close on the heels of this reason was “easier to pay with another method,” at 36%, and “see no benefit,” at 35%. The basic problem with a mobile payment, at least at the point of sale, is that, viewed purely as a transaction, it offers little or no improvement over a card swipe.
Most of the companies profiled in our Field Guide, which starts on page 24, know that. The question is, how soon can they deliver products that will captivate consumers?
John Stewart, Editor
john@digitaltransactions.net
