Contactless Cards vs. Mobile Phone Payments – What Do Consumers Prefer?

Contactless Cards vs. Mobile Phone Payments – What Do Consumers Prefer?

Contactless Cards vs. Mobile Phone Payments – What Do Consumers Prefer?

Jonathan O'Connor

Jonathan O'Connor

Jonathan O’Connor translates data into compelling stories as a part of the payment insights team at Auriemma Consulting Group, a boutique management firm specializing in the payments and lending space.

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Apple Pay's launch of mobile payments in 2014 spurred headlines touting the digital payments revolution. But in the years since, plastic has continued to thrive. Consumers have swiped, inserted and now they’re beginning to tap with contactless cards.

Some argue that the proliferation of tapping a physical card at checkout will increase the comfort of tapping one's phone. However, a recent report by Auriemma Research's Mobile Pay Tracker suggests that contactless cards may have some mobile-friendly consumers reverting from digital to physical payments.

Although mobile payments and contactless cards utilize the same near-field communication (NFC) technology, adoption of mobile payments is well behind contactless cards. Since its mainstream release, mobile payments have been used by 34% of eligible consumers, far less than the 59% of cardholders who have tapped with their contactless card. 

Among the big three mobile payment providers, Samsung trails behind Apple and Google. One quarter of those eligible for Samsung Pay have used it, compared to 35% for both Apple and Google Pay. And these proportions are in line with historic figures that have only changed nominally over the course of mobile payment's run.

The majority (60%) of mobile payment users expressed interest in using contactless cards, compared to 28% of non-users.

Contactless card usage, however, appears poised for a steady rise because the physical card is so familiar to consumers. And the data shows that mobile payment users are more open to tapping their cards because they've been exposed to tapping with their phones. Exactly 72% of mobile payment users have used a contactless card to make a payment, compared to just 42% of non-users.  

Changing payment behavior

Consumers have been repeatedly asked to change their payment behavior. While adjusting from swiping to inserting to tapping a card is easy, the larger switch to tapping one's phone takes more time. Although learning to tap with a card will certainly increase comfort in contactless technology, it isn't guaranteed to benefit mobile payment adoption in the long run.

72% of mobile payment users have used a contactless card to make a payment, compared to just 42% of non-users. (Source: Auriemma)

Mobile payment users are enthusiastic about contactless technology. The majority (60%) expressed interest in using contactless cards, compared to 28% of mobile payment non-users. Mobile payment users are also more likely to believe contactless payments can improve everyday purchases. More than one-third say their experience with self-checkout lanes, grocery stores, vending machines and public transportation would be made better if they were able to use contactless payments. 

Until recently, contactless payments were not accepted at many terminals because of outdated technology. However, as retailers update their point-of-sale terminals to accept the technology, both contactless cards and mobile payments will have space to grow.

Although these upgrades will make mobile payments an option at an increasing number of locations, that doesn't mean mobile payment adoption will rise. Overall, consumers are uncertain about whether contactless card payments are better or worse than mobile payments — 65% say they are about the same, 18% say they are better and 17% say they are worse. 

Those who believe contactless card payments are better typically say they are faster, easier and more secure than mobile payments. Ironically, mobile payment users often say the same thing when asked why it is better to pay with mobile then with plastic. Those who believe contactless card payments are worse often express concerns about security (e.g., more susceptible to fraud, wouldn't be any safer) and say they still need to take out their payment card. 

When contactless misfires

Consumers have more options at checkout than ever before, but will they choose contactless cards or a mobile wallet? Although upgraded terminals benefit both methods, the point-of-sale experience continues to be fragmented for mobile payment users who must pull out their physical card when things go awry.

With contactless cards, technological barriers to tapping won't upend the entire payment process. Consumers can still dip or swipe with the same payment method in hand. This alone makes for a much smoother payment experience, offering the mobile payment benefits people love without the barriers that have persisted since its rollout.

The statements and opinions of the writer do not necessarily reflect those of TSYS.

Other Articles by Jonathan

Jonathan O’Connor

Jonathan O’Connor translates data into compelling stories as a part of the payment insights team at Auriemma Consulting Group, a boutique management firm specializing in the payments and lending space.

On the payment insights team, Jonathan creates reports, based on consumer research, that analyze market-shaping forces such as emerging technologies, changing behaviors and attitudes, and new market entrants. He also co-authors Auriemma's Twitter account (@auriemma_group), where followers get the latest findings from the company's studies.

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