Federal Reserve Bank of Boston: Mobile Payments Adoption Not Expected to Pick Up
It’s not hard to look at the mobile payments market these days and think it’s on the cusp of an explosion; just think of all the new product offerings. Yet when we go shopping, and ask to use Apple Pay or the like, we’re often met with blank stares. A new report from the Federal Reserve Bank of Boston says that mobile payments adoption rates are likely to remain sluggish this year, thanks to a familiar culprit.
The Reserve Bank of Boston asked bankers what was slowing up the adoption of mobile payments. The bankers’ responses were familiar: a lack of acceptance at retailers, a lack of loyalty and rewards programs, and the like. The leading reason to the bankers, however, was security, easily the most common bugaboo mobile payments have known since their inception.
Interestingly, security was only a major problem for some, but a problem of some level for all. Fifty-one percent considered security a “high” barrier, while 35 called it a “medium” barrier. Another 14 percent called it a “low” barrier. That kind of unanimity makes it clear that security is still a major problem when it comes to mobile payments adoption.
Banks are projecting that three to five years is now the minimum standard for “industry-wide consumer adoption,” according to 80 percent of respondents. Seventy-five percent say likewise on time frames in in-app and mobile web use. While some here might think that this could be addressed with some more marketing of security features, the constant drumbeat of data breaches isn’t helping.
The problem here, perhaps, is that the bank was talking to bankers. Banks are already quite a bit behind in terms of mobile payment adoption, so to their customers, the notion is still new, and thus often mistrusted. We know full well that mobile payments functions at the store level aren’t doing half bad—Starbucks has all the proof there anyone could ask for—but the banks have really just begun.
Banks need to get their own mobile payment houses in order, and fairly quickly; the ground gained by Apple Pay, Samsung Pay and the rest won’t be so easily taken by anyone else. Beating security issues will be a significant challenge, but that’s the price of entry into this growing market.