Mobile payments still face adoption challenges - report

According to Digital Banking Report in “Mobile Wallets: The Battle for Top-of-Mind”, 15 % of consumers have used a mobile wallet in the last 6 months, while 22 % expect to use a mobile wallet in the next six months.

Looking back to a 2013 study, India and China had the highest percentage of consumers who indicated they have made purchases through a mobile device of all the countries studied. 18 % of respondents in China, and 15 % of those in India, indicated they had purchased items via a mobile device. The global average for all countries studied, by comparison, was 8%.

However, new statistics show that while mobile payments are gaining in popularity, the adoption is still quite low, especially for the mobile wallet. According to a survey conducted by Chadwick Martin Baily of more than 1.700 consumers in the spring of 2015, 15 % of the respondents said they paid with a mobile wallet in the last six months for an item. 22 % said they hadn’t done so, but planned to in the near future, while 63 % did not have any plans to use a mobile wallet at this point.

There are many reasons for the lack of consumer interest, security concerns being an important barrier to mobile wallet adoption. 62 % of respondents list security as the number one barrier, down from 73 % in 2013.

Digital Banking Report shows that 55% of respondents cited a preference for existing payment methods as a main reason for avoiding mobile payments. Security concerns were a second key inhibitor of mobile payment adoption (40 %), with 4 in 10 non-mobile purchasers avoiding the behavior due to concerns about the safety of mobile payments. Furthermore, a perceived lack of value to making payments through a mobile device was another reason consumers avoid using mobile wallets (30 %), while 25 % say they don`t have the needed features on their phones to use mobile payments. Finally, 16 % don`t understand the different types of mobile payments, while 12 % say the cost the cost of data access on their wireless plan is too high and 5 % responded that the places where they shop don`t accept mobile payments.

When it comes to banks, only 10 % of financial institutions offer mobile payments, while 47 % plan to offer mobile payments within the next 1-2 years and 43 % do not plan to offer mobile payments.

In this respect, the banks need to create mobile wallets that alert users to their spending limits, bank deposits and other customer-defined parameters. Mobile wallets also need to differentiate themselves by tracking customer spending across both physical and online retailers and across all payment methods while providing basic budgeting tools. Finally, they need to track and encourage loyalty through tangible rewards.