Mobile Payments Make Big Overall Gains, but In-Store Purchases Lag

By Jim Daly
@DTPaymentNews

Nearly three-quarters of mobile-phone owners have made some sort of payment with their devices, but in-app, bill, and person-to-person payments all exceed in-store payments, according to new findings from First Annapolis Consulting Inc.

The Annapolis, Md.-based consulting and research firm says 74% of mobile-phone-using consumers reported in June they had made a mobile payment in the preceding 12 months versus only 40% who said they had done so in First Annapolis’s May 2015 survey. Some 55% of mobile payors in the latest survey had made an in-app payment and 54% had paid a bill, up from 23% and 27%, respectively, just over a year earlier. The number of people saying they had sent or received a P2P payment more than doubled to 27% from 13%.

Those big increases reflect the overall trend of consumers using mobile devices for functions they once did on desktop computers or laptops, including banking, according to Melissa Fox, senior manager in the payments strategy and innovation practice at First Annapolis.

“A lot of what we’re seeing … is a macro shift to mobile,” Fox tells Digital Transactions News.

In contrast, only 23% of this year’s respondents reported having made an in-store purchase with their phones, up from 16% in May 2015. Those lower numbers reflect the still relatively small number of merchants that can accept mobile payments, as well as the difficulty in getting consumers to substitute smart phones for credit or debit cards or cash at the point of sale, according to Fox.

Similarly, while the study found that mobile wallets are gaining users, only 25% of mobile-phone users with compatible devices have adopted a ‘Pay’ service such as Apple Pay (42% of iPhone 6 users), or Android Pay and Samsung Pay (14% and 18% of compatible devices, respectively).

Mobile-wallet adoption has been “slower than many people anticipated,” says Fox. “I think that’s somewhat the nature of change in the payments business. New things take a long time to gain traction.”

Some 45% of June’s respondents reported that they preferred to have a mobile wallet from their bank, but only 7% actually had one. The reason for that gap is mainly availability, with only a few payment-enabled bank mobile wallets in the market so far, according to Fox, including those from JPMorgan Chase & Co. and Capital One Financial Corp.

Consumers’ desire for bank mobile wallets stems from perceptions that banks remain the safest places to keep their money, Fox adds. “It dovetails with concerns about security and trust,” she says. “Banks still have a corner on that market from a mind-share perspective.”

Meanwhile, more than 80% of Apple Pay, Android Pay, and Samsung Pay users reported being very or somewhat satisfied with those services. This biggest issue with dissatisfied users is “lack of merchant acceptance,” says Fox.

The June survey was based on an online poll of 1,528 Americans between ages 18 and 54 who own a smart phone and have a checking account or debit card. The margin of error was plus or minus 2.5 percentage points at the 95% confidence level.