Consumers are ready for the future of mobile payments. However, standing in the way of adoption of contactless, tap-to-pay technology are two enormous industry sectors. Retailers and banks will be expected to act quicker over the next 12 months in order to bring this safer and more secure type of payment to their customers.
Toward the end of 2015, roughly 17 percent of iPhone owners had used Apple Pay, and 7 percent of Android owners had used Android Pay. More than a year on and the amount of NFC-capable smartphones has increased significantly. Despite this though, not an awful lot has changed.
Tap-to-tap pay terminals are crucial to widespread adoption of this type of technology. A large proportion of consumers are utilising this tech on a regular basis, using contactless bank cards to make various transactions.
According to Creative Strategies, 80 percent of consumers in the UK have made a contactless transaction via a tap-to-pay terminal. However, using our smartphones to pay for goods on a regular basis still seems a long way off.
The future does seem bright for mobile payments though. Consumers who have used Apple Pay, Android Pay and Samsung Pay are finding the overall experience a positive one, with speed and convenience being two major contributing factors to their satisfaction.
Kevin Jenkins, managing director of Visa UK and Ireland, predicts that in five years’ time, more than half of Visa transactions will happen on a smartphone or tablet rather than via cards.
Security still a concern
Whilst security is one of the prime reasons to adopt mobile payment technology, it’s something which is still a huge concern amongst consumers.
40 percent of consumers list security concerns of adding their credit/debit card to their smartphone as the main reason they have yet to try it, while 29 percent said not trusting the transaction was their main reason.
So what’s the solution? This piece is purely around education. Especially on smartphones that are secured by biometric protection, as opposed to pins, this is one of the safest ways to authorise payments and it is the responsibility of the banking and retailing sectors to educate the consumer in this area.
Will cards become redundant?
Despite the launch of mobile wallets, consumers haven’t ditched their bank cards as quickly as some experts originally predicted. As NFC mobile payments and mobile wallets become more widely accepted by retailers and banks though, consumers will steadily shift away from the need to carry a physical card.
At this point, the transformation of this market place moves away from a technological challenge and we move into the adoption stage of the development cycle. In order for mass adoption to take place, clear benefits of mobile payments over contactless card payments must become evident.
At present they do exist. For example, they offer higher payment limits and increased security, however, these aren’t quite tangible enough to stimulate behaviour change. In addition, the frequency of retailers not accepting mobile payments is still too high to reach the tipping point where new habits are formed.
The evolution of wearables
Despite some of the challenges wearables currently face, they are clearly the next evolution in payment technology. Once wearable tech has found a purpose beyond the quirky new fitness toy, it’s highly likely that it will make carrying a wallet or bank card a thing of the past.