Consumers have been surprisingly indifferent to mobile payments solutions on their smartphones, even as Apple and Google and other tech giants battle for control of the marketplace.
Apple Pay, Android Pay, Samsung Pay, and CurrentC are all building their own mobile payments solutions, each with its own compatibility issues.
In our hyper-connected mobile world it seems logical that smartphones would replace wallets, just as they did cameras, maps and landlines. But while two thirds of Americans have smartphones and 57% of them use their phones for online banking, mobile payments account for just 1% of all U.S. consumer spending today.
So far only Starbucks has had major success with mobile payments, which account for 15% of their sales.
Why Mobile Payments Are Lagging
Behind consumer’s hesitant acceptance of mobile payments are three main factors:
- Indifference: A 2015 survey of 1,000 consumers found that only 17% of consumers would use their smartphones to pay for items “always” or “some of the time” if they could.
- Distrust: Research shows consumers have security and privacy issues when it comes to mobile payments. In one study 35% of the US consumers surveyed believed that mobile payment systems are not secure.
- Confusion: Consumers are confused by the proliferation of mobile wallets and mobile payments solutions from various technology providers and retailers.
Consumers don’t really care much about mobile payments on their smartphones yet. Credit cards and cash are just fine with them.
A Fragmented Marketplace
Cash or a credit card will almost always work in any store. Mobile payments systems, however, will not. Many companies and retailers, it seems, want to own the mobile transaction real estate on your phone, including:
- Apple Pay: Uses Near Field Communication (NFC) so that you make a mobile payment with just a just a “tap” to a retail reader. Users must enter in passwords or pin, however.
- Google Pay: Also uses NFC. Users will not have to enter in a separate pin or password with the solution, as it is integrated into the Android operating system.
- Samsung Pay: Works with certain Samsung phones using barcode scanning technology, not NFC
The market becomes even more complex and fragmented when considering that some retailers want to develop their own mobile payments solutions as well, including Walmart, BestBuy and Target, which are jointly developing a new, barcode-based system called CurrentC.
For those who care about, trust, and are not confused by mobile payments solutions, there remains just one more problem: a survey of US retailers found that 54% of such people were holding off on investing in mobile payments solutions due to security concerns.