Commentary

The 3 Obstacles to Mobile Payments

Though gaining some traction in numerous areas, mobile payment systems are still on somewhat of a climb on the way to mass acceptance.

While consumers deciding to use a mobile device to pay is part of the issue, it’s not the only one.

A new report identifies the three limitations initially delaying the dollar volume associated with systems such as Apple Pay.

The first is out of the consumer’s control, according to the study on banks regarding EMV,  Apple Pay and mobile apps by Mercator Advisory Group.

For example, NFC transactions are accepted only by a very narrow set of merchants, according to the report. This is likely to change over time, as more merchants adopt EMV point of sale terminals by the end of this year.

Those terminals typically can be adapted to handle mobile payments.

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The second obstacle is the limited number of NFC-enabled mobile phones active in the market and the reluctance of mobile carriers to enable access to the secure element of active mobile phones, according to Mercator.

For example, Apple only recently adopted NFC for Apple Pay, so a consumer needs an iPhone 6 to be able to use it. While hundreds of thousands of Android phones have NFC built in, it’s only recently that carriers allowed Google Wallet to be used.

The third impediment identified is consumer behavior. Mercator research found that a large percentage of consumers don’t trust the security of their phones for payments, which is hardly a surprise.

But even if consumers do trust them, they need to remember to use their phone at a merchant location and if they have a failed transaction, they will not be inclined to use it next time, according to the study.

On the positive side, the forecast says that by 2025, U.S. consumer purchasing using mobile phones instead of a payment card will account for 16% of all dollar volume.

One significant stat noted in the report is that in 2011, most (79%) of smartphone owners had not even tried using their phone to pay and by last year, more than half (57%) still had not tried any form of mobile payments.

Getting those who have never tried mobile payments to give it a shot is but one more part of that steep climb.

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