Commentary
Mobile Payments Apps & the Slow Road
- by Chuck Martin , Staff Writer, March 17, 2014
When it comes to mobile payments, it may come down to the
haves and the don’t wants.
In a new nationwide snapshot, almost a quarter (22%) of consumers say they have apps for mobile payments while the majority (61%) not only don’t have any but say it makes no difference.
Roughly one in 10 said they wish they had mobile payment apps, according to a survey by the Apigee Institute. More people (39%) wish they had an app for remote car starts than one for mobile payments.
The Digital Impact survey or 1,000 smartphone owners was conducted to assess how mobile devices and apps are affecting their everyday behaviors, tasks and attitudes.
Respondents' region, age, income, education and gender distribution reflects the U.S. smartphone market based.
The study found that more consumers wish they had an app for tracking home energy use, remote for turning on lights or real-time emergency support over mobile payment apps.
And while 22% who have apps for mobile payments would recommend them, 5% have them but would not recommend them.
And that study is not the only indicator of the lack of mobile payment interest, at least from the consumers’ perspective about using them while shopping.
In a survey of 25,000 consumers in five countries (US, UK, France, German, Spain), Bain & Company found that awareness of mobile payments is high but only a quarter of those surveyed are willing to use their mobile device for in-store payments.
Many of the respondents (40%) said they were unwilling to move to mobile payments since they don’t see the need for changing their payment behavior.
From a consumer desire and acceptance standpoint, mobile payment apps seem to be on an uphill climb.
Chuck Martin is Editor of the AI & IoT Daily at MediaPost and writes the daily Connected Thinking column. He is a NY Times Business bestselling author and his latest book is “Digital Transformation 3.0” (The New Business-to-Consumer Connections of The Internet of Things.) He is CEO of Net Future Institute and a frequent keynote speaker internationally. Follow him on Twitter @chuckmartin and contact him at Chuck@MediaPost.com.
"...they don't see a need for changing their payment behavior." Exactly. It's just as easy to pull out and swipe your credit card as it is to pull out and swipe your phone. Plus, even with a mobile wallet, you still have to carry your actual wallet to keep your drivers license, health insurance card, etc. Until 1) there's an incentive for consumers to change behavior, and 2) you can store your drivers license and other important credentials on your phone, it is unlikely mobile payments will expand beyond the early adopters.
Right Carissa, it's all about the value provided as incentive.
Chuck, I have not read the survey results or the questions asked the survey respondents. Based on the information you provided and a multitude of research I have read previously in regards to mobile payments and digital wallets three things are clear to me. 1) Most mobile payment survey respondents are unaware of when they are making a mobile payment, 2) mobile payments successes are use case based and 3) the concept of mobile payments and digital wallets get intermingled by most people.
When I read survey results such as these, I wonder how the questions are asked. When a smartphone user buys an app or a song they are most likely making a mobile payment transaction. Apple users are doing a mobile payment with iTunes and Android users are making a mobile payment with Google Wallet. When the survey results show that a majority of smartphone users do not have a mobile app they are not including iTunes and Google Play purchases.
Starbucks is having success with mobile payments. The Starbucks CDO is quoted as saying "With more than 11 percent of transactions a week now happening with a mobile device in our stores, and nearly 10 million customers currently using our mobile app..." (Source: http://www.mobilepaymentstoday.com/article/229331/Starbucks-upgrading-mobile-app-will-enable-in-app-tipping )
Another interesting data point is "two-thirds of the 140 million U.S. adults with smartphones are more likely to shop at a store that provides a useful mobile app" (Source: http://apigee.com/about/pressrelease/apigee-finds-two-out-three-us-adults-smartphones-are-more-likely-shop-store-provides )
Starbucks has a useful app that includes payments. Personally, I find using the digital version of my Starbucks or Dunkin' Donuts pre-paid cards easier than the physical card.
What about digital wallets?
I'm fortunate enough to have a smartphone, Motorola Moto X, that supports both the ISIS digital wallet and Google Wallet. I have used them both at vendors that have modern POS terminals which for me is mostly at McDonalds, CVS and Walgreens. For me, they work great as I have my loyalty cards stored in my phone and not in my wallet so my phone is needed for those type of transactions.
@Carissa Ganelli raises a good point, a digital wallet needs to be more than a place to store payment cards and loyalty cards. It needs to hold more of a physical wallets contents. The real game change will come when the designers of these digital wallets realize that replacing the physical wallet is not the use case.
With the release of the MCX payment app expected soon, we shall see what the appetite is for consumers to make purchases with a mobile app.
@dmgerbino
I agree that in order for mobile payments to be widely accepted and used the consumer-facing payment apps will have to enable extended capabilities that minimize the need for a physical wallet. Additional functionality must allow a consumer to input all cards (membership, loyalty, health, etc.) and connect with an almost limitless number of payment types. An inhibitor from the merchant/restaurant side is the necessity of a new peripheral to accept the mobile payment. Retailers are not going to want to purchase large numbers of peripherals, requiring large investment and disruption in stores and with customers, for mobile payment types that are not widely used.
Solve these issues and I think mobile payment has one very appealing feature, especially in younger demos, and that is ability to carry/use of a single mobile device (and perhaps an ID/drivers’ license.) I would also not discount the appeal of the digital fashion statement that a single device holds for mobile early adopters.
Good point, David. As to the Apigee study you referenced, I also wrote about that on Friday as it relates to mobile shopping (http://www.mediapost.com/publications/article/221294/smartphone-shopping-with-apps-not-so-much.html). There were separate questions in the study separating tap and pay from apps for mobile payments, if that insight helps. That statement of "useful" app was used in the press release but was only part of the question asked in the actual study, which is what I based this on. And great point about use case.
Yes, Larry, that POS hardware modification/replacement is a major issue. Some countries are more advanced than others in this regard. The chip & pin acceptance in Europe, for example and QR code payment sin China (though those were just shut down by the Bank of China, for the moment, at least.) There also are other mobile payment devices here and coming that do not require any POS modification, which we have written about here.
You keep your wallet with your pertinent information in your pocket or bag very near to you. How many people leave their phones on the tables in restaurants or constantly out in their hands easy to grab and run ? All that information in just one place makes for some very sorry stories and lives.