By: Joe Gillen
The mobile payment industry is currently booming, and experts say that it will become ubiquitous in the coming years. Mobile banking programs have already cemented themselves as a key feature of most national, community and credit union programs. New studies have also shown that these features are becoming an increasingly important factor most consumers consider when switching banks or opening new accounts. As more turn to their smartphones to play a larger role in their financial lives, many consumers say that using their mobile devices to make the majority of their transactions may soon become more common than cash or credit cards.
A new Harris Poll reveals that 66 percent of Americans think smartphone payments will replace transactions made via credit or debit card, while 61 percent believe they will be used more than cash. Despite the sentiment that digital wallets will become more common than cash or credit payments, few are willing to argue that this change will take place in the near future. Of the 66 percent who believe mobile payments will replace card transactions, only 32 percent think this will happen in the next five years. Further, only 26 percent of those who think mobile payments will replace cash say it will occur during this same timeframe.
Consumers still not on board with mobile payments, banking
Although Americans believe that smartphone transactions are the way of the future, it appears that they themselves still carry reservations about this payment method - a scenario that has been largely attributed to the slow adoption of mobile payments. For example, 51 percent of respondents who are not yet ready to start using mobile payments say they don't want to store personal financial information on their phones, and 40 percent are uncomfortable with the idea of transmitting these details to a merchant's payment device. More simply, 50 percent of study participants say they don't own a smartphone.
When broken down by demographic, it appears that younger generations are those who are more interested in the convenience of mobile banking and payments. Forty percent of Echo Boomers and 34 percent of Generation X expressed interest in the ability to make remote transactions with their phones. This is compared with only 18 percent of Baby Boomers and 7 percent of Matures.
Many financial institutions are contributing millions of dollars in research and development to build their mobile platforms, particularly the remote check deposit feature. However, analysts say that before these investments will pay off, banks and credit unions must also devote resources toward educating the public on the security and safety features of these payment platforms to facilitate widespread adoption.