Most reports about mobile payments and mobile transactions often provide pockets of information — only giving a piece of information here and a piece there to help the payments ecosystem understand how consumers are using mobile devices.
But in the Consumers and Mobile Financial 2015 report released last week, The Federal Reserve laid it all out there for us to see. And it’s a whole lot more than a snapshot of mobile payment trends — rather, it’s more like a scrapbook of how the industry has evolved over a four-year period.
The survey took the temperature of adults age 18 and over from a panel of more than 50,000 randomly selected individuals. This study was done in 2014 and had more than 5,000 people in the sample survey. It delves into topics like consumer access to mobile banking, consumer payment for goods and services using mobile phones and consumers' shopping habits that are triggered by the use of mobile phones.
To understand how mobile transactions can evolve, it's first important to understand how mobile the U.S. really is. Turns out, it’s pretty mobile. But that mobile population isn’t as mobile-payment friendly. Here's what the Fed study has to say about the state of mobile and financial services in 2014.
87 | Percentage of U.S adult population that has a mobile phone. 71 percent of those are smartphones; that figure is up from 61 percent the year earlier.
52 | Percentage of smartphone users who've used mobile banking within a year leading up to the survey; that's an increase from 51 percent in 2013.
61 | Percentage of people using mobile banking to transfer money between accounts.
51 | Percentage of those who've use mobile banking to deposit checks in 2014.
11 | Percentage of those that don't currently use mobile banking who said they likely would in 2015.
But what about mobile payments? The many innovators who are all really working hard to change how we use our mobile phones to pay in physical stores would like us to believe that consumers are chomping at the bit to do it. But are they? And, just how much has it changed over the past four years? Spoiler: the number of people who do use mobile phones that way is growing, but it’s not exactly setting the world on fire.
39 | Percentage of mobile payment users who used their smartphone device to make payments at the POS terminal in 2014. What's important to note is that number didn't change from the figure that was reported in 2013.
28 | Percentage of smartphone users who made a mobile payment in the 12 months leading up the survey. That's a 4 percent increase from 2013 and 2012. Bill payment through site or mobile app was the most popular “use case” at 68 percent of respondents.
31 | Percentage of mobile payment users who paid by scanning a barcode or QR code; 22 percent said they used an app that did not require tapping their phone or scanning a barcode at checkout; that’s a 5 percent increase from the year prior.
"Although using a mobile phone to pay for a retail purchase at the point-of-sale is less common than paying bills or making an online or in-app purchase, it is becoming less rare of an occurrence," the report indicated, which the industry will likely continue to see as Apple Pay, Google Pay and even Samsung Pay, etc. gain more traction among consumers.
The survey indicated that 39 percent of all mobile payments users with smartphones made POS purchases with their mobile phone in 2014, but among the POS mobile payments, less than half (41 percent) had made a POS payment in the month prior to when the survey was conducted (December 2014, taking into account results from the year prior).
Still, developments in technology, new players in the market, along with consumer familiarity with mobile payments will help the mobile payments paradigm shift. And as revealed in the PYMNTS/InfoScout Apple Pay adoption survey results compiled with InfoScout, it's going to require a cultural shift and a change of consumer habits to get most consumers used to paying with their phone. From that survey, nearly a third of respondents who had tried Apple Pay said they forgot it was a payment option they could use. Why? They don’t use it enough to form a habit.
Another key metric to understanding why more consumers aren't turning toward their mobile device as their payment method, is why respondents chose the method of payment they did.
86 | Percentage of non-mobile bankers who said their banking needs were met without the mobile option.
75 | Percentage of consumers who said they don't use mobile payments because they believe it's easier to pay with cash or credit/debit cards.
59 | Percentage of non-mobile payment users who fear the security of the technology so they don't make mobile payments. 62 percent on non-mobile banking users indicated the same reason.
59 | Percentage who said they don't see a benefit from using mobile payments
31 | Percentage of people who don't understand all the mobile payment options; the same percentage said they find it difficult or time consuming to set up mobile payments
23 | Percentage of those who said they shop at places that don't accept mobile payments.
13 | Percentage of those who said they care to use mobile phone as a virtual wallet to replace some cards in a wallet if the security and other related concerns mentioned in the survey were addressed.
The results also show that consumers appear to be more aware of the need to protect data stored on their phone, and this — coupled with not understanding the technology — may be holding consumers back from using mobile phones as payment devices.
When mobile phone users were asked how safe they believe people’s personal financial information is when they use a mobile phone to pay for a purchase at a store, it’s an interesting mixed bag. About half of the respondents feel that it is “somewhat unsafe” (28 percent) or “very unsafe” (21 percent). Of those surveyed, 15 percent said they “don’t know” if personal financial information was safe when using the mobile to enable payments. The percentage that said that POS mobile payments were “very safe” was only 5 percent, while 30 percent said that it was “somewhat safe.”
But even if all the consumer concerns are addressed, will people ditch their wallets for their phones? It doesn't seem most consumers are warm to the idea. That may eventually change, but it will take, repeat in unison, a value proposition to get them over the hump.
All that said, smartphones are changing the way people shop and make buying decisions. Mobile’s impact on commerce is, however, less about payments and more about the influence of what they buy.
69 | Percentage of shoppers who have changed where they purchased a product due to use of their smartphone to research online.
53 | Percentage of smartphone users who used mobile banking to check their account balance or credit limit in a store and then decided against the purchase.
47 | Percentage of smartphone users who used their phones while at a retail store for research; 33 percent used their phone to scan a product barcode to price compare.
42 | Percentage of users who have read product reviews while shopping online; 79 percent of consumer respondents changed their mind based on the reviews they online.
But what about the unbanked? That's the population that has caught the attention of those across the payments sector, in particular those focused on expanding mobile money schemes across populations who remain unbanked.
90 | Percentage of underbanked who have access to a mobile phone; 73 percent have access to smartphones.
48 | Percentage of underbanked consumers who had used mobile banking in 2014.
"The relatively high prevalence of mobile phone and smartphone use among younger generations, minorities, and those with low levels of income—groups that are more likely to be unbanked or underbanked—makes mobile phones a potential platform for expanding financial access and inclusion," the report said.
Mobile Payments: A Snapshot By Time And Region
Mobile payments made via smartphones, according to the Fed survey, have increased only slightly, from 23 percent of smartphone users turning to mobile payments in 2011 to 28 percent in 2014.
"A continuing impediment to adoption of either mobile banking or mobile payments appears to be consumers’ limited demand for them: many consumers said their needs were already being met without mobile banking or payments, that they were comfortable with non-mobile options, and that they did not see a clear benefit from using either service," the report said.
And in rural versus urban areas, the statistics show there's less of a demand for mobile payments outside the urban area. In metro regions, 23 percent of consumers said they used mobile payments in the past year. In non-metro areas, that dropped to 17 percent. But when looking at remote areas, mobile payments was used by 20 percent of respondents. Overall, mobile banking continued across every region as being more popular than mobile payments.
By how much are mobile payment tasks embraced? Here's how those figures stacked up:
29 | Percentage who made an online or in-app purchase
27 | Percentage of those who paid bills through a mobile Web browser or app
17 | Percentage who paid for a product or service at a store using the mobile device
17 | Percentage who used an app to receive loyalty or reward points
14 | Percentage of those who transferred money to another person's bank/financial account.
14 | Percentage of people who received money from another person
7 | Percentage of those who paid for parking, a taxi or public transit using payment app
3 | Percentage of those who made a payment using a text message
3 | Percentage of those who sent a remittance to someone outside the U.S.
Now that we've broken down how people are using mobile to influence their payments and commerce experience, what did the FRB conclude about the future of mobile payments?
"The main factors limiting consumer adoption of mobile banking and payments are a preference for using other methods for banking or making payments and security concerns,” the report concluded.
And that about sums it up. Consumers haven't quite caught onto the mobile payments in-stores bandwagon, despite the many, many efforts of major companies to convince consumers of its value. And those who do get the concept, and have the capability, may not trust using their device to replace their wallet. Or they may simply forget. After all, mobile payments, like any other payment option is all about habits. And that’s a habit the mobile payments players are working to change.