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Credit Cards and Cash Still Favored Over Digital Wallets
by Jack Loechner, Tuesday, January 21, 2014 7:37 AM
The Harris Poll of 2,383 adults wonders if after holiday shopping, or ordering a drink at your favorite coffee shop, you settle the bill with a simple tap of your smartphone against the merchant's
point-of-service terminal. The technology is already here, albeit at an emerging level, says the report about the poll findings. 13% of Americans indicate that they have either paid in this manner
themselves (4%) or witnessed it firsthand (8%), with predictably stronger experience levels among smartphone owners (18%, 7% and 11%, respectively). Americans feel that this is just the first
indicator of a fundamental shift in how they are likely to pay for goods and services in the years to come, with over six in ten indicating that they believe smartphone payments will eventually
replace both payment card (66%) and cash (61%) transactions for a majority of purchases. While many Americans perceive this change in payment culture is a likely eventuality, considerably
fewer appear to perceive it as imminent: although 66% believe smartphone payments will eventually replace payment card transactions, only 32% believe this will happen in less than five years.
Similarly, though 61% of Americans believe smartphone payments will eventually replace cash for the majority of purchases, only 26% think this will happen in less than five years. Expected Time When Smartphone Payments Will Replace Cards/Cash For Majority Of
Purchases (Base: All U.S. adults; % of Group) TotalSmartphone UsersPayment Card Transactions
Ever 66%76% In
less than 5 years 32 38
Within the next year 2 2 1 year to less than 3 years 12 14
3 years to less than 5 years 19 21 5 years to less than 10 years 19 21 10 years or more 15 17 Never 34 24 Cash Transactions Ever 6170 In less than 5 years 26 31 Within the next year
2 2 1 year to less
than 3 years 9 12
3 years to less than 5 years 16 18
5 years to less than 10 years 18 21
10 years or more 17 18
Never 39 30 Source: Harris Interactive, January 2014 Despite the majority of Americans indicating that such changes to our collective
purchasing habits are ahead, few display a strong interest in replacing their own cash or card transactions with the a smartphone. Although 27% of Americans, and 44% of smartphone users report
overall interest in being able to use their smartphone to process in-person payments, far fewer specify being veryinterested in doing so (8% and 16%, respectively). Nonetheless,
interest levels point to some segments which are most interested overall in this ability:
- Echo Boomers (40%) and Gen Xers (34%), display considerably stronger interest in doing so than
either Baby Boomers (18%) or Matures (7%)
- 32% of men are significantly more interested in this technology than women (22%)
- 38% of those in households with children also display
considerably stronger overall interest than those in households with none (22%)
Among those who indicate being either not very or not at all interested in being able to make smartphone
payments, security is a clear factor. 51% say they don't want to store sensitive information on their phone, and 40% don't want to transmit sensitive information to a merchant's device. Another
impediment is the simple matter of smartphone ownership, with 50% indicating they are not interested in doing so because they don't use a smartphone. The other top impediment speaks to a deeper issue
facing the mobile payment industry. 52% of those not interested indicate that they simply don't see any reason to switch from cash or payment cards.
- Looking specifically at smartphone
owners not interested in using their devices to process payments, 68% don't want to store sensitive information on their phones, 51% don't want to transmit sensitive information to the merchant's
device, and 62% don't see any reason at all to switch
While 28% of Americans, and 40% of smartphone owners indicate that, being able to make mobile payments while still taking
advantage of their existing credit card reward programs, would make them more interested in doing so, only 9% and 15% respectively, specify that they would be
much more interested. Moreover,
only 1% of those
not interested in paying with smartphones indicate that this would make them much more so. When asked how the ability to use their smartphones as a "digital wallet"
with electronic versions of all the identifications, loyalty program cards and other documentation normally carried in a wallet, only 8% of Americans and 12% of smartphone owners indicate it would
make them
much more interested. Only 2% of those not interested in paying with smartphones overall indicate that this would make them
much more interested.
Reason For Lack Of Interest In Using A Smartphone To Process Payments (Multiple Response
OK)
ReasonTotal Don't
see any reason to switch from cash or payment cards 52% Don't want to store
sensitive information on my phone 51 Don't use a smartphone 50 Don't want to transmit sensitive information to the merchant's device 40 Worried that my smartphone might lose data service / connection (out of range, underground,
etc.) and leave me unable to pay 25 Worried that my smartphone's battery will run
out and leave me unable to pay 15 Don't understand how to use it 8 Don't know where I can use it 7
Something else 7
Source: Harris Interactive, January 2014 The report concludes by noting that when debit cards came to prominence, they did so by responding to a
genuine consumer desire by combining the use-anywhere convenience of a credit card with the ability to draw from money in users' checking accounts instead of incurring debt. Thus far, the mobile
payment industry has yet to find a similar "in" with consumers. For
additional information from Harris Interactive, please visit
here.