Consumers embrace mobile payments for speed and convenience.
WASHINGTON—A new issue brief from The Pew Charitable Trusts finds that consumers are interested in using mobile payments for speed and convenience but also have concerns about security of their personal information.
The issue brief, “Is This the Future of Banking? Focus Group Views on Mobile Payments,” is based on focus groups convened by Pew in May 2015 with smartphone owners who have bank accounts but have not tried mobile payments; those who have bank accounts and have used mobile payments; and those who do not have a bank account (the “unbanked”).
A majority of the focus group participants were familiar with or had used mobile payments—by accessing a website via the browser on a smartphone; by paying via a text message from the phone; or by using a downloaded app to make online and point-of-sale purchases, pay bills, and send or receive money.
“Our conversations with consumers demonstrated the potential of mobile payments but also the barriers that will need to be overcome if this potential is to be fully realized,” said Susan Weinstock, director of Pew’s consumer banking project.
“Moreover, mobile payments technology could provide an accessible channel to the unbanked for their financial services. Nearly 10 million adults are unbanked, but about a third of them have a smartphone.”
The study’s key findings include:
- Younger smartphone owners with bank accounts used mobile banking more regularly than similar consumers over age 66. Those who had adopted mobile banking were using it to pay bills and transfer funds; some were also using it to deposit checks.
- Mobile payments were used most frequently for online shopping and funds transfers. Users cited convenience and speed as reasons for adopting the technology.
- All groups had relatively high awareness of major mobile payments brands, which allow consumers to make mobile purchases at a variety of online and brick-and-mortar retailers—through services such as PayPal, Apple Pay, and Google Wallet—and to buy coffee at Starbucks, which currently has the most popular mobile payments app.
- Participants cited several barriers to using mobile payments, including a lack of perceived personal benefit as well as discomfort with some industry practices, particularly regarding security.
- Nonusers found potential incentives—cash back, reward points, discounts and coupons, and free items—enticing and suggested that they might use mobile payments if these were offered.
- Participants were generally unaware of what personal data are collected when they conduct transactions online and via smartphones or how those data are used. They also did not know whether or to what extent their privacy is compromised. Many seemed resigned to the trade-off between use of the technology and collection of personal data, although they indicated they would prefer that data collection were regulated.
- Most unbanked focus group participants previously had a bank account and cited several reasons for no longer having one. Most said they aspired to get a new bank account.
Mobile payments have become a viable option for unbanked consumers to make transactions and manage their funds. The technology could also offer a more convenient and potentially cheaper way for all Americans to manage their money. It has been criticized, however, as a possible threat to customers’ security and privacy.
The Federal Deposit Insurance Corp. reports that nearly 8 percent of U.S. households—approximately 9.6 million—lack bank accounts, but 33 percent of those have access to smartphones.
Pew held eight focus groups in four cities—Tampa, Florida; Atlanta; Chicago; and San Jose, California—with a mix of banked and unbanked consumers and users and nonusers of mobile payments.
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The Pew Charitable Trusts is driven by the power of knowledge to solve today’s most challenging problems. Learn more at www.pewtrusts.org.