Banks should be the drivers for mobile payments because consumers expect them to be. So goes VocaLink’s key finding from its latest commissioned study to better understand what is driving consumer behaviour and how the industry needs to react.
Other key findings were:
- Consumer apprehension has shifted from security concerns to connectivity and battery life
- Parking remains the third most popular area for use of mobile payments and joint-second highest growth area of mobile payments in the last 18 months
- Once people use once they adopt
- Consumers are confused through no fault of their own and could be easily encouraged to adopt mobile payments
- Opportunity is rife for banks
"No one likes cash these days. It’s spent too easily", was one quote that emerged from the survey- an interesting counter-narrative to the usual line that mobile payments, in removing the ‘painful’ element of physical cash handover, make it too easy to fritter money away.
The main obstacles that need to be addressed for widespread mobile payment adoption are: lack of ubiquity, lack of awareness. Banks need to address consumer confusion because they (still) have it all to play for, explained Cara O’Nions, marketing and customer insight director at VocaLink.
Ideally we need an interconnected set of rails, which would, even more ideally, extend cross border, as David Bannister suggested.
Allayed security concerns are down to "increased familiarity with the technology, reflected in increased uptake and more frequent use, with 46% of smartphone owners now using their device for some form of mobile banking (almost doubled from 27% in 2013)", according to the report.
But that’s mobile banking, mobile payments remain "relatively nascent", said the report, despite encouraging growth stats. Awareness of mobile payment brands is very low and confusion is rife as to which solution works in what way and with which banks. And the banks are best placed to rectify this. Moreover:
- 47% are more likely to use new payment services if provided by their bank
- 42% are more likely to use new payment services if provided by PayPal
- 41% are more likely to use new payment services if provided by a card scheme eg Visa, MasterCard
- 31% are more likely to use new payment services if provided by a service provider recommended by their bank
- 21% are more likely to use new payment services if provided by the government
"With so many mixed marketing messages, banks have the opportunity to provide leadership and guidance at a time of universal confusion," said Paul Stoddart, managing director, strategy, products, marketing and business development.
There are likely be three or four winners, and whether customers will choose one solution for everything or will be happy to have the few main solutions is as yet unclear. Findings indicated that people tend to "reduce down quickly" and when they find something they like, tend to look no further. But it is also likely that consumers will have "one or two subsidiaries" and it all depends on how well the key issue of ubiquity is addressed.
Smartphone adoption stands at 84%, up from 60% in 2013, according to the report. And customers are happier using biometrics than before as well.
Paym was regarded as not having nearly enough promtion as it might have, but Zapp could be set to make waves in light of its upcoming launch, particularly in the wake of awareness brought about by Apple Pay’s UK launch in July.
Both Paym and Zapp were built by VocaLink.
VocaLink commissioned the study, which was carried out by Illuminas. Findings were taken from 5,000 UK consumers aged 16 to 75, plus focus groups. VocaLink provides the platform for Bacs, the Current Account Switch Service and the Faster Payments Service as well as the LINK ATM network and is owned by a consortium of banks and building societies.
|% Using smartphone to pay…||2013||2015||Change (percentage points)|
|Friends and family||9||33||+24|
|Larger expenses, eg airline tickets or electronics||6||17||+11|
|Small daily purchases||6||16||+10|
|Motorway tolls / congestion charge||4||15||+11|