Mobile Payments Need a Marketing Campaign
If retailers want to see consumers using mobile payments any time soon, they’ll have to teach them to trust the apps. Research shows shoppers are worried about privacy.
Meanwhile, the mobile payment industry is growing at a rapid pace. In fact, by 2020, nearly one-third of U.S. smartphone users will replace a card swipe at least once every six months. However, many consumers are slow to adopt the new form of payment.
Initially it was all about the lag in technology. For instance, mobile payments rely on near-field communication (NFC), the technology that allows two devices placed in a proximity to exchange data. Many retailers were initially slow to adopt these contactless POS terminals, which created a kink in the payment process.
However, with the latest EMV security standards, this is quickly changing. Retailers are now ordering new EMV-compliant terminals from major providers, such as Verifone and Ingenico, which typically accept NFC payments. With technology catching up, you’d think mobile payments adoption would too, right? Think again.
According to an eMarketer study, mobile wallets will not reach mass adoption in the foreseeable future. Notably in 2016, just 19.4 percent of U.S. smartphone users leveraged their mobile phones to pay at the point of sale at least once over a six-month period. Consumer adoption remains slow and this is likely because of concerns about security.
Per a 2015 study of mobile payment security from ISACA, nearly half of respondents think that mobile payments are not secure. Specifically, 87 percent of cybersecurity experts expect to see an increase in data breaches over the next 12 months. With a myriad of high-profile data breaches in the retail space, consumers are quick to doubt the safety of mobile payments. Ironically, trust is required for this solution to gain significant traction.
Believe it or not, mobile payments are generally more secure than other forms of payment, including your standard credit card. The tokenized process takes the worry away from the traditional swipe because the actual credit card data is not transferred or stored on the retailer’s network. Many recent high-profile data breaches would not have happened at all if this type of tokenization had been in place. Not to mention, it creates a frictionless retail experience.
Starbucks is a great example of a company that “gets” it. In the first quarter of 2017, Mobile Order & Pay (MOP), the company’s smartphone app launched in 2015, accounted for 7 percent of transactions. This figure has more than doubled year-over-year. Additionally, mobile payments alone accounted for 27 percent of U.S. company-operated transactions during that same period. In fact, the process of using a mobile device to order ahead and pay via the app with a quick scan has gotten so popular that Starbucks is researching ways to make its operation more efficient to handle the increased volume without negatively impacting the experience of customers who still choose to order through the traditional barista.
The benefits of mobile payments are undeniable, and consumers already have a wide range of options to choose from. From Starbucks’ MOP to Apple Pay and Google Pay to department stores like Kohl’s and Walmart, there are many solutions competing for adoption into the space. Ultimately, the vendors who can communicate both the security and time-saving benefits will come out on top.
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