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Few doubt the tremendous growth in mobile payments as consumers increasingly wield their mobile phones at the point of sale. In fact, consumers spent approximately $4 billion doing just that in 2014, a marked increase from the $961 million in 2013, says the “Mobile Proximity Payments Forecast 2015,” a new report from Javelin Strategy & Research.
Despite the increase, a significant number of consumers have yet to adopt the smart phone-based technology for the point of sale. When asked why they are not using a mobile device to make purchases, 55% of survey respondents said they prefer to use their usual payment method. That outpaced security concerns, at 40%, the next biggest reason.
“Once a payment method becomes a habitual method, it becomes more difficult for customers to move to a new method,” notes the report. “The tendency to form habits also helps to explain the phenomenon of younger customers being more open to new technologies. When consumers do attempt a new service, the ease of use is critical.”
The findings from Pleasanton, Calif.-based Javelin are based on multiple surveys conducted from 2012 to 2014, with sample sizes ranging from approximately 3,200 to more than 3,500 consumers.
Mobile-payments providers should promote the security of their services, Javelin says. Allaying security fears will greatly aid adoption, the report says. “As more consumers adopt mobile banking and payments, they become cheerleaders and steer other consumers into trying them.”
Other factors for not using mobile payments include lack of value, 30%; phone lacks necessary technology, 25%; lack of understanding of mobile payments, 16%; data cost too high, 12%; lack of merchant acceptance, 5%; and other, 7%.
Despite these concerns, momentum appears to be on the side of adoption. With more consumers using Apple Pay and the expected releases this year of CurrentC, the Merchant Customer Exchange (MCX) mobile-payment service, and Samsung Pay, mobile-payment volume is poised to reach approximately $7.3 billion in 2015, and projected to grow seven-fold to $54 billion by 2019, according to Javelin.
In addition to more consumer options influencing the projected mobile-payments volume, more merchants are expected to accept the nascent technology. Merchants are buying EMV-compatible POS terminals, which in most instances also have built-in contactless-payment capabilities. Javelin expects to release an updated EMV terminal adoption forecast this month.
