It’s hard not to feel optimistic about mobile payments adoption, especially in the face of mobile’s sheer momentum: just last week, new data from comScore found that mobile commerce is growing at a rate of 30 percent year-over-year, and that multi-platform users now account for the majority of digital shoppers.
Still, while a case can be made that mobile as a platform is reaching critical mass, new research from TSYS suggests debit and credit payments are too entrenched, both online and at the physical point of sale, to cause true disruption in commerce.
“Mobile consumes a lot of dialogue in our industry and internally at TSYS, but our view is that the infrastructure, at least in the U.S., just isn’t in place to a wide degree,” Ryan Barnes, associate director of consumer product for TSYS North America, told PYMNTS.com.
The conclusion stems from TSYS’ recently issued third annual Consumer Payment Choice study, a comprehensive new report that surveyed more than 1,000 respondents to reveal new insights into how consumers use debit and credit, and what might convince them to adopt alternatives.
To break down TSYS’ findings and what they mean for those looking to impact mobile commerce, Market Platform Dynamics (MPD) CEO Karen Webster spoke with Barnes in an extensive interview.
Karen Webster: Mobile is obviously the roadmap that everyone in payments is following. What did you learn from asking consumers about their mobile preferences? (Jump to 3:26)
Ryan Barnes: What we wanted to do in our study was find out the interim steps TSYS could take as well as what steps the industry should be thinking about and that are relevant until the infrastructure is there.
We found that mobile offerings that ease interaction between the cardholder and his or her account, that make it easier to manage everyday finances, the types of functions that might even allow the cardholder to help prevent fraud are very valuable to consumers in the interim, but that payments are a couple steps down the road.
Did you find evidence that getting consumers just to use the devices in other financial circumstances would provide an onramp for adoption? (Jump to 4:44)
In our focus groups, we found that security is a big concern. So, financial institutions (FIs) may be reviled a lot in the press, but from a security standpoint and a trust standpoint, with consumers we still find that they’re the most preferred provider. A lot of mobile technologies are still a bit scary for consumers, the idea of losing their phone and with it losing all the means they have to conduct everyday commerce is somewhat of a big step for them.
So, even if the infrastructure is in place, we predict there will still be some reticence on a pretty significant swath of consumers to convert immediately.
It may be too soon to ask, but there is this notion that once a mobile app is downloaded and there is a payment method attached to it, consumers simply set it and forget the payment method. Did you find evidence of this in your research?
There’s a section where we ask consumers about actions they took in the past year, and anywhere between 20 and 30 percent of respondents in our survey said they had registered a credit or debit card with their most used online retailer.
The implication that we think this holds for issuers is those most visited online retailers have the ability to disintermediate the core credit card that’s used by the consumer with a private-label or branded card of their own. So if a credit or debit card is truly set it and forget it, and a lot of checkout processes move that way, then more and more of the transactions could move toward wallets where that card is stored and forgotten about.
For more on how this mobile checkout migration could impact issuers, and what TSYS’ data reveals viable strategies for this potential future will be, listen to our full podcast below. To download the full report, click here.
*If you have trouble with the audio player above, click here.
Ryan Barnes is Associate Director of Consumer Product. He performs market analysis and assesses new offerings for consumer issuing clients. He holds degrees from the University of Georgia and Emory University.