Mobile wallets spin their wheels in the mud as consumer adoption stalls
The publication I edit, Mobile Payments Today, spends a lot of time discussing mobile wallets, particularly the marriage between Apple Pay and Passbook. And, in the coming months, we’ll spend more time debating the long-term viability of Samsung Pay, Google Wallet, PayPal, CurrentC and anything else that might emerge in the market (Microsoft Pay?).
Why are we spending so much time discussing mobile wallets? Because they’re supposed to be the future of commerce, although, right now, it might not seem that way. One of the biggest talking points at the moment with mobile wallets is consumer adoption. And, boy, are we seeing enormous obstacles that the industry still needs to overcome.
Over the past several weeks, multiple industry studies show some disconnect between consumers and mobile wallets.
CreditCards.com released a survey in March 2015 that found consumers who responded that they “never” or “hardly ever” paid for goods with a mobile phone accounted for 64 percent of 1,000 respondents. The website, which is a credit card comparison tool, conducted the telephone survey between March 5 and March 8. That 64 percent figure is up from 62 percent when CreditCards.com asked the same question in September 2014.
This survey followed one that InfoScout conducted after Black Friday 2014. Remember that one? It caused a lot of Apple fanboys to cry foul because they thought the results were as rigged as a pro wrestling match.
Only 4.6 percent of 170,000 households with an iPhone 6 device used Apple Pay to purchase items at retailers who accepted Apple Pay, according to the InfoScout survey. Thirty-one percent of those consumers didn’t pay with Apple Pay because they were unaware the retailer accepted it. Some 25 percent of respondents forgot to use it, which highlights how difficult it is to change consumer behavior after years of card swipes at the register.
So, what are we to make of both surveys, particularly the most recent one from CreditCards.com?
My first reaction when I read the CreditCard.com survey, was this: I’m not surprised. It’s no secret that, despite the recent buzz about mobile payments, consumers still are not particularly enthusiastic about the idea for multiple reasons. Most consumers view paying with cash or plastic as a fine experience, and that’s not going to change anytime soon. Consumers are creatures of habit and it’s difficult for them to break old ones.
Most consumers also don’t believe mobile payments are safe. That view could be the result of heightened awareness thanks to all the data breaches the past two years and counting. If you haven’t recently had a credit or debit card replaced, consider yourself one of the lucky few. Apple Pay is working to change consumers’ perception about the safety of mobile payments, as technologies such as tokenization become a standard in the industry.
For the foreseeable future, we’re going to live in a world (specifically in the U.S.) that’s very much card-based. And that’s OK. Mobile-payments proponents wanted the shift to happen yesterday, but that’s not a realistic mindset and they might have only themselves to blame.
One of the more intriguing results from Mobile Payments Today’s annual State of the Industry report came from a question we asked executives about what’s holding back widespread mobile payments adoption.
Many executives do not believe consumer adoption has met their expectations. Most believe the industry as a whole has not provided consumers with enough clarity to foster widespread adoption. Executives also overwhelmingly believe that consumers’ concerns about mobile payments security are hampering wider adoption.
This being said, there are a few ways that mobile payments providers can help grow adoption.
The CreditCards.com survey found that millennials think highly of mobile payments; 24 percent of respondents age 18 to 29 said they wanted to pay with their smartphones “always” or “most of the time.” That’s not a high percentage, but keep in mind that the figure plummets for older respondents. Mobile payments providers should focus on this particular demographic to help boost adoption because this generation is and will be responsible for major consumer shopping and technology shifts in the market.
And what about older consumers? The answer is simple: give them a better reason than convenience or cool-ness to use mobile payments.
Providers can’t keep talking about the convenience factor with mobile payments at the point of sale. That argument doesn’t hold weight with most consumers, regardless of the demographic. One of the areas where some mobile providers fall short on convenience is with rewards.
Some providers do it better than others. LevelUp and Sionic Mobile put their rewards programs front and center. The actual mobile payment is a means to an end, i.e., paying for a purchase. The problem these companies face at the moment is that their reach is limited. Both continue to add more acceptance points, but they are nowhere close to being widespread.
In addition to the consumer adoption issue, another problem has surfaced and it has to do with merchants and how a specific system (Apple Pay) operates.
Phoenix Marketing International recently released a survey that found 68 percent of 3,002 consumers polled reported issues with Apple Pay transactions.
“Even though Apple Pay users generally give the scheme high marks, and 23 percent expect to significantly increase use over the next three months, problems at checkout are downgrading transaction potential,” Leon Majors, senior vice president at Phoenix, said in a statement about the survey results. “Two out of three Apple Pay users have reported a problem at checkout — mostly related to terminals not working or taking too long to make the transaction, inaccurate posting of transactions, and the inability of cashiers to help buyers who needed assistance in using Apple Pay.”
The latter is a huge issue and one I encountered once when I tried to use TabbedOut at a bar in Cambridge, Massachusetts. TabbedOut enables you to start and pay a bar or restaurant bill within the company’s mobile app. But, when I went to this particular establishment, my server didn’t know how it worked, despite advertising TabbedOut at the bar.
The bottom line is that high consumer adoption rates are going to take time because they depend on a lot of factors: changing consumer preferences; merchant adoption and awareness; compelling marketing efforts; and patience. This is not going to happen overnight, and there will be many missteps along the way as we’ve already witnessed. Let’s have this discussion again in 2020.