A Reality Check for Mobile Payments

December 17, 2018         By: Steven Anderson

Looking back on the year that was is a common activity in December, particularly for those already of an introspective bent. Seeing what went wrong, what went right, and what just didn’t go anywhere is a great way to tell what exactly the next 12 months should look like. A new report out from PaymentsSource, meanwhile, took a look at the recent history of mobile payments, and shows us all there’s still a ways to go on this front.

Mobile payments have serious problems. A study found that mobile payments actually came in last on three key fronts: “easy to use” “convenient”, and “accepted everywhere.” That’s a serious perception problem, and given that mobile was beaten by cash, credit and debit, it’s the kind of thing that’s hampering the entire market.

Worse, mobile payments are competing in a market with entrenched values. Credit card is the leading form of payment for US consumers at 34 percent, and cash comes in second at 28 percent. Debit card is a narrow third at 27 percent, while mobile wallet is a meager five percent. The rest of the market is made up by three percent paying with personal check and two percent using a store card and / or app.

So why are people staying away from mobile payments? Security is an issue, but not as much as you’d think. Sixty-six percent were staying out from sheer force of habit; there’s no distinct reason to go to mobile payments. Fear of fraud is just 39 percent, while tech issues are 23 percent. Losing the device comes in last at 18 percent.

We can see there are problems here, but the good news is that many of these are problems we already know about. Thus, mobile payments providers are probably already working on solutions. Many security issues have been shored up already, so now, we’re out to give customers a reason to use the apps, commonly seen as integrated rewards programs that cash and cards can’t touch. We’ve already seen Starbucks use a similar plan to great effect, so it should work elsewhere.

Only time will tell just how well this works, but given what we know, we may be well on our way to fixing some of the biggest problems.