Why Isn't Mobile Pay Usage Spreading Faster?

Why Isn't Mobile Pay Usage Spreading Faster?

Why Isn't Mobile Pay Usage Spreading Faster?

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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Although some thought mobile payments would catch fire, its adoption has been more of a slow burn.

However, for mobile payments to spread more quickly, consumers must have the ability to use it, it must achieve ubiquity among merchants and consumers, and its usage must become habitual. Although this is not currently the case, Auriemma Consulting Group's Mobile Pay Tracker reports that mobile payments are certainly on their way to mainstream usage, albeit slowly.

We found that a variety of factors are preventing mobile payments from becoming a habit and are slowing adoption overall. These challenges include lack of opportunity for satisfied users to discuss and recommend the payment method, low eligibility among the general population and a lack of visibility.

Recommendations not guaranteed

We found that eight in ten mobile pay users report being satisfied with mobile payments, but only half recommend it. Why the discrepancy? This group is near evenly split between those who feel their mobile payment experience was adequate and those who say it was exceptional. Thus, it should be no surprise that these users behave differently. Extremely satisfied users, for example, when compared to those who are merely satisfied, are much more likely to recommend mobile payments. They're also more likely to say that future usage will increase, and will more frequently ask the cashier if mobile payments are accepted.

Eligibility is low, but growing

About three-quarters of U.S. consumers own a smartphone, but less than half of them are equipped for mobile payments. Users, then, make up an even smaller proportion of this already small group. Simply put, there aren't many people able to talk about mobile pay or who have the ability to try it, for that matter. While those with eligible smartphones tend to be younger, affluent and educated, this limited population will become more mainstream as upgrade cycles introduce the general population into the mix. As the eligible population grows and more consumers become users, we can expect visibility to increase, and for conversations about mobile pay to become more commonplace.

Limited exposure to mobile

Mobile pay will be recommended by enthusiastic users, but until there is ubiquity, users have no one to talk to about the payment method. The overall lack of visibility — of witnessing fellow shoppers using the method, or witnessing merchants accepting it — creates huge barriers for mobile pay adoption. In order to spark a mass movement, these points of reinforcement are crucial, as they introduce potential new users and can fortify the habit among current users by reminding them to take out their smartphone instead of their wallet.

Several barriers still exist that could send consumers rifling through their purse or wallet for a physical card. In fact, reaching for the card is most often the response when mobile pay users encounter difficulties at checkout, such as a finicky terminal or clueless cashiers. However, habitual users appear to be most likely to push past these problems, actively seeking merchants that accept their mobile payment, asking if they can use mobile payments when in the store, and asking for help when needed.

Mobile still new

For its newness, mobile payments are actually doing rather well. Users are satisfied, provisioning multiple cards in their mobile wallets, using other payment methods less, and using the payment method for a notable proportion of their discretionary spend. As more eligible mobile-pay users enter the fold, we can expect more of the same.

Given what we know from this early group of users, however, it would seem as though once more consumers become eligible and are willing to try the payment method, adoption will spread much more quickly.

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

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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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