When mobile payment technology first became available, some experts referred to it as a solution in need of a problem. The EMV chip card switch provided it with a very real problem that it can fix. Most of the new chip card readers (including Square) can handle the near field communication (NFC) technology used by mobile payment services such as Apple Pay and Android Pay, according to Wired magazine. As you may recall, the idea of using NFC phones to pay at the checkout counter received a big boost in the fall of 2014 when Apple unveiled Apple Pay with the cooperation of a trio of big-name credit card companies. This meant not only that Apple Pay would be available on the newest iPhones, but that Apple would put its considerable corporate weight behind the service. So, how are mobile payments doing at this time in the United States?
In the most recent study of mobile banking and payments by First Annapolis Consulting, the share of Americans who have made at least one mobile payment in the past 12 months is now 74 percent, up from 58 percent just six months ago and 40 percent in May 2015. This leaves 26 percent of respondents who have yet to try mobile payments, whether it’s using their phone to make an in-app purchase, pay a bill, receive loyalty points on an in-store purchase, or make any number of other mobile money transfer transactions.
When asked what’s holding them back from mobile payments, the most common response from almost two-thirds of the nonusers (64 percent) was concern about security. This response was similar across all age groups.
A feeling that they simply don’t need mobile payments was second at 42 percent followed by privacy concerns at 41 percent. Respondents ages 45-54 (the oldest age group delineated in the findings) were more likely than younger respondents to cite the concerns.
The First Annapolis Consulting study was conducted in June among 1,528 U.S. consumers age 18-54 who both own a smartphone and have a checking account or debit card. Like its previous editions conducted in December 2015 and May 2015, the sample demographics were generally aligned with U.S. Census distributions.
While mobile payment technology has been around for a while, it looks like momentum is slowly building with consumers. Mobile payments via Apple Pay and Android Pay are much faster than card payments. Once you link these services to your credit card account, you make payments by simply holding your phone up to a compatible reader. When security and privacy concerns are addressed and the value of mobile payments is communicated more effectively to consumers, the momentum in the U.S. is likely to increase at a faster rate.
(Photo: Apple Payment Square by Mybloodtypeiscoffee – Own work, CC BY 4.0)