April 30, 2013
Will Incentives Drive Mobile Payment Adoption?
Money-saving incentives and mobile-based financial management tools may be required to increase consumers’ use of smartphones as payment devices, according to survey from Accenture.
More than half of respondents who currently use their smartphones to make payments said they were highly likely to pay by phone more often if they could use their phone to track receipts (cited by 60 percent of respondents), manage their personal finances (56 percent), show proof of insurance (56 percent) or of a valid driver’s license (54 percent).
In addition, more than half of those who currently make mobile payments also said they were highly likely to pay by phone more often if they were offered: instant coupons from retailers (cited by 60 percent of respondents); reward points stored on their phone for future purchases at the store (51 percent); coupons that could be automatically stored on their phone (50 percent); or preferential treatment, such as priority customer service (50 percent).
Similar incentives appear to work with people who don’t make mobile payments. About one in three non-users said they would be more likely to use mobile payments if they could use their phones as proof of insurance or to track receipts (each cited by 32 percent of respondents). About one in five non-users said that they would be more likely to use mobile payments if they received preferential treatment at retailers or coupons for future purchase that could be stored on their phones (cited by 21 and 20 percent of respondents, respectively).
Security concerns ranked as the greatest barrier to consumer adoption, cited by 60 percent of non-users. Privacy issues and the convenience of using cash, checks or credit cards were the next most-mentioned reasons, each cited by 37 percent of respondents.
Matthew Friend, managing director, Accenture Payment Services, North America, said in a statement that while the survey showed consumers are "still very concerned" about security and privacy issues, a significant number still don’t see the convenience and value of using their phones to make payments.
"While persuading current users to become more regular users is clearly important, getting people to use this technology in the first place is the biggest challenge the industry faces," said Mr. Friend.
The survey of 4,000 smartphone users in the United States and Canada was conducted in October.
BrainTrust
Recent Discussions
Discussion Questions
Do you think consumers’ uncertainty over mobile payment security can be overcome by offering convenience and cost-savings incentives? How can retailers help motivate consumers to adopt mobile payment solutions?
Poll
Consumers need financial incentives to try mobile payments (e.g. $5 off your first purchase), and there better be convenience features to keep them coming back. Payment alone is never enough; the offering must be coupled with loyalty, coupons, etc., to be differentiated from existing payment methods.
Two types of security issues come to mind. The first is what I expect most worry about and that is the security of the transaction which is certainly a concern. However, I also wonder about the physical security of a phone.
Unlike a wallet that is generally secured in a pocket or a purse, except when being used, a cell phone is something many people seem to have in their hand or have sitting on a table, chair, etc. I hear far more stories about lost or misplaced phones than I do about wallets. Unfortunately I also hear about phones, particularly iPhones, being stolen from riders on the Meta here in Chicago.
All that being said, I understand the attraction. Like many, I stopped wearing a watch because I carry a phone so I can always find out the time. Not having to carry a wallet for ID, payment and other purposes sounds attractive, but now if I lose my phone, I only lose my phone…not everything.
It is amazing what consumers—call them shoppers—will do to save money. The uncertainty issue will be overcome by the security of KNOWING you are getting $5 off, or that 1% of all mobile checkouts goes to your favorite charity. The donation also eliminates the guilt of overbuying.
Want to help motivate mobile payment? Give ’em the extras—money, stuff, or points!
Tom…not a mobile payment guy…waiting for stuff….
Security concerns are nowhere close to what they should be.
Software integrity and security are an annual $2.2 trillion problem in the US alone, over $6 trillion worldwide. Software is the most poorly produced product in the history of mankind. Every time you use your phone for a payment, some kind of information is sent in both directions. The question is “what information?” You might be being violated and so might the retailer; in essence you’re likely to be violating each other. Truth is, we just don’t know.
Your new phone does not arrive in the pristine, chaste, virgin state you think it does. Unfortunately it’s been fooling around before it even met you. A Brookings article warns that since that phone has parts from many different countries, the “long supply chains and inadequate or nonexistent product evaluation before deployment, create a situation where widespread vulnerabilities exist in products and networks.”
Enticing people to take further risks by offering “cost saving incentives” is like putting asbestos on sale. The biggest challenge is solving the integrity and security issues.
In the effort to get consumers to adopt mobile payments, convenience will trump cost-saving incentives. Tracking receipts may not be required for buying that latte at Starbucks, it certainly is necessary when purchasing shoes, clothing, etc.
Understanding the technology and how to use it properly is also a current barrier of acceptance. Perhaps retailers could conduct impromptu workshops and/or demonstrations to help people remove the ‘fear’ of the technology. Offering incentives as part of their participation may be useful.
Pulling out a credit card and swiping is still much more convenient all the way around for consumers. You don’t have to check and see if they take credit cards or the employee knows how to use it or start to use it and have someone have to be called because “we don’t use it that much.”
Discounting is not the panacea marketers think it is. Of course anyone will say “give me a coupon and I’ll use it.”
Once a customer decides to “take it” they don’t want to have to think or worry—they want to get out the door and on with their day. While one can analytically think mobile is easier, the process, much like self-service, is not as simple as it might seem for consumers. That has nothing to do with price.
It’s not about features, it’s all about ease of use. Until most retailers adopt uniform payment systems and security standards, mobile payments will be stuck with single-digit consumer acceptance rates. The survey is misleading because it does not address these issues.
Yes. Security concerns will go away when the technology solution delivers enough value (convenience, savings or rewards). This is no different than the adoption of online brokerage sites and credit cards. Both had security concerns that went away. For online brokers it was savings ($7 per trade instead of $50 or $100). For credit cards it was rewards and convenience that helped consumers accept the usage and take on the risk.
The big issue with mobile payments today is there are no real advantages. NFC (Near Field Communication) is as easy as swiping a credit card, so why bother? Mobile payment solutions will need to create a large enough incentive (convenience, rewards or savings) to get consumers to switch. Part of this will also come down to retailers adoption of technology. If your favorite retailers do not accept mobile payments it really hurts the convenience story. Credit cards had to overcome this same hurdle.
Someone once said that it was a very brave man who was first to eat an oyster. It was a very brave person who was first to use PayPal, and another brave sole who was the first to use mobile for payment. Here’s the point: New technology is sometimes a little scary, especially when sensitive information is being shared (like credit card info, social security numbers, etc.). However, it is up to the industry to prove to customers that mobile payment solutions are safe, convenient and easy. One way is to give the consumer an incentive to use mobile payment. And, in the process, train the consumer.
Look at how the airline industry has trained people to purchase tickets online, check in the day before and use the kiosk at the airport. It took a long time, but it is now mainstream. They gave their customers (passengers) extra miles for booking online and using the kiosks. The incentive got them using the technology and learning how to navigate the different screens. Perhaps the first time someone bought their ticket online, it took ten minutes. By the third or fourth time, it took two or three minutes.
The mobile payment industry can take a lesson from the airline playbook on how to teach a group of customers to use their product and feel comfortable doing so.
People use credit cards because of convenience and trust; the incentive part helps determine preference and volume of usage. Convenience, I think, trumps all, and that’s where mobile payment form factor and process is still not there except for specialized applications like toll and parking payments. I still feel that pulling out a credit card and swiping is faster for general shopping than pulling out the phone and launching an app to verify payment (especially when my phone is attached to a headset in my pocket). I would love to hear any personal experience to the contrary.
Over time, and with a growing number of consumers using mobile payment systems without any security issues, the resistance of using mobile payment as a more convenient alternative to traditional point of sale payment will fade. However, the relationship building efforts of the banks and the credit card behemoths through points and loyalty programs should not be lightly regarded. These programs are working and establishing a very settled and vested customer base. They will not give up marketshare easily and will spend to defend their turf.
To that point, strong incentives with immediate or near-term gratification will be critical to the adoption rates of mobile payment programs. Retailers will need to fully understand the financial benefits of transitioning payments from the more expensive, incumbent platforms to the new, more agile and less expensive (per transaction) mobile alternative. In addition to the more obvious advantages of lower transaction fees, there is also inherent shopper loyalty built into attracting and retaining mobile payment users. Given these advantage, it shouldn’t be difficult for the retailer to understand the ROI of an investment of user incentives to gain adoption and retainer and build usage.
Incentives won’t hurt, but I think ease-of-use will be a much bigger driver — and only if security concerns can be addressed. Integration with loyalty programs could be a feature to drive early usage. If I can just wave my phone rather than digging through my wallet for a loyalty card in addition to the credit card, I may start to change my behavior.
We’re already using our phones as airline boarding passes and in many other ways that no one thought of five years ago, so I think widespread adoption of mobile payments might not be far off.
It would be more interesting to see a global consumer study in this area. We can learn how more “advanced” regions have adopted this technology and have made it a part of their daily lives with no security fears.
Incentives are good drivers for adoption, however, a rock-solid technology infrastructure is actually a more compelling reason to adopt.
I must have gotten up on the wrong side of the bed today but…why do we think we need to “motivate” consumers to use mobile? Is “not using mobile” bad for them? Are they losing something because of it? I suggest we find out what the consumer wants.
Yes, security is number one, so why not look into ways to give the consumer convenience with security? I think PayPal does this quite nicely. (No, I don’t work for them or receive payment for my endorsement.) I’m just saying that there are ways to give the consumer what they want without forcing them to use mobile when it maybe isn’t the most secure, IMHO.
Consumers’ uncertainty over payment security is clearly well founded. Mr. Percy makes this argument well. If you need further evidence, just check with the folks at Hannaford or Schnucks.
Further, this statement is interesting: “a significant number still don’t see the convenience and value of using their phones to make payments.” Just what exactly is the value? Is there really a difference in convenience?
As a somewhat recent convert to mobile technology, I certainly see all of the capabilities. However, I haven’t as yet ventured into the “payment” use of it. I have a “card” that works everywhere. Why do I need to switch back and forth from retailer to retailer?
I have seen well what can be done with this technology by Starbucks whom I consider the champion of it. Nevertheless, there is so much less exposure there vs. straight out account access.
Incentive does not always relate to value. Retailers looking to persuade their customers in this direction should first ask why. Then they should ask why again and again.
Consumers have made smartphones an increasingly larger and more important part of their lives. First and foremost, smartphone ownership increases daily. Based on the April, 2013 Prosper Insights & Analytics Monthly Consumer report, 59.1% of Adults 18+ own a smartphone; 68.5% of Macy’s shoppers own one of those devices, and 77.2% of 18-34 year olds have one.
Ownership figures from the April, 2011 survey, a mere two years ago, were 32.2% for 18+, 43.5% for Macy’s shoppers, and 50.4% for 18-34 year olds.
Once the devices are in their hands, consumers will find ways in which to make their lives easier. One in four Adults 18+ confirm that they comparison shop “regularly” via their Smartphone, and over one in three 18-34 year olds comparison shop in this manner.
Consumers are depositing checks in bank accounts with smartphones, and they will shop and pay for goods and services via these devices. There will be some trepidation, but the early adopters have already started, and this genie is not going back in the bottle.
Assuming the security concerns are resolved—and that has both real and psychological aspects—it becomes a “what’s in it for the consumer?” question.
Some shoppers are going to want to reduce the number of items they carry, including the number of credit cards, or will just want to do the “cool” thing, which will drive them to use mobile payments. But that is limited to the early adopter crowd and is dependent upon a majority of (all?) retailers accepting mobile payments for it to work.
For other shoppers, it comes down to either saving money, time or hassle. That means discounts, faster checkout and/or a more convenient processes (such as handling receipts).
If none of those benefits are realized, it becomes that classic question of “whose problem is mobile payments really solving?” The retailers? If that’s the case, adoption will be very limited and slow.
Scan-and-pay-as-you-shop will eliminate the need for checkout—the single greatest benefit from mobile payment. And this will revolutionize other features of self-service retailing as well.
Steve Jobs would NEVER have done a survey like this, for what should be obvious reasons—shoppers do not know what shoppers need until someone who should know better, tells them what they need. And they don’t need to be paid (coupons, etc., etc.,) to do what works better for them.
The first thing that needs to happen is to establish a clear winner in the virtual wallet war. One part of the winning solution will be to create a broad acceptance network that makes using the form of payment as easy for consumers as plastic with mag stripe.
With this foundation, differentiation can be created through incentives and promotions layered into the system.
There is a sweet spot at the intersection of payments and loyalty, but consumer confidence must be established first.
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Consumers need financial incentives to try mobile payments (e.g. $5 off your first purchase), and there better be convenience features to keep them coming back. Payment alone is never enough; the offering must be coupled with loyalty, coupons, etc., to be differentiated from existing payment methods.
Two types of security issues come to mind. The first is what I expect most worry about and that is the security of the transaction which is certainly a concern. However, I also wonder about the physical security of a phone.
Unlike a wallet that is generally secured in a pocket or a purse, except when being used, a cell phone is something many people seem to have in their hand or have sitting on a table, chair, etc. I hear far more stories about lost or misplaced phones than I do about wallets. Unfortunately I also hear about phones, particularly iPhones, being stolen from riders on the Meta here in Chicago.
All that being said, I understand the attraction. Like many, I stopped wearing a watch because I carry a phone so I can always find out the time. Not having to carry a wallet for ID, payment and other purposes sounds attractive, but now if I lose my phone, I only lose my phone…not everything.
It is amazing what consumers—call them shoppers—will do to save money. The uncertainty issue will be overcome by the security of KNOWING you are getting $5 off, or that 1% of all mobile checkouts goes to your favorite charity. The donation also eliminates the guilt of overbuying.
Want to help motivate mobile payment? Give ’em the extras—money, stuff, or points!
Tom…not a mobile payment guy…waiting for stuff….
Security concerns are nowhere close to what they should be.
Software integrity and security are an annual $2.2 trillion problem in the US alone, over $6 trillion worldwide. Software is the most poorly produced product in the history of mankind. Every time you use your phone for a payment, some kind of information is sent in both directions. The question is “what information?” You might be being violated and so might the retailer; in essence you’re likely to be violating each other. Truth is, we just don’t know.
Your new phone does not arrive in the pristine, chaste, virgin state you think it does. Unfortunately it’s been fooling around before it even met you. A Brookings article warns that since that phone has parts from many different countries, the “long supply chains and inadequate or nonexistent product evaluation before deployment, create a situation where widespread vulnerabilities exist in products and networks.”
Enticing people to take further risks by offering “cost saving incentives” is like putting asbestos on sale. The biggest challenge is solving the integrity and security issues.
In the effort to get consumers to adopt mobile payments, convenience will trump cost-saving incentives. Tracking receipts may not be required for buying that latte at Starbucks, it certainly is necessary when purchasing shoes, clothing, etc.
Understanding the technology and how to use it properly is also a current barrier of acceptance. Perhaps retailers could conduct impromptu workshops and/or demonstrations to help people remove the ‘fear’ of the technology. Offering incentives as part of their participation may be useful.
Pulling out a credit card and swiping is still much more convenient all the way around for consumers. You don’t have to check and see if they take credit cards or the employee knows how to use it or start to use it and have someone have to be called because “we don’t use it that much.”
Discounting is not the panacea marketers think it is. Of course anyone will say “give me a coupon and I’ll use it.”
Once a customer decides to “take it” they don’t want to have to think or worry—they want to get out the door and on with their day. While one can analytically think mobile is easier, the process, much like self-service, is not as simple as it might seem for consumers. That has nothing to do with price.
It’s not about features, it’s all about ease of use. Until most retailers adopt uniform payment systems and security standards, mobile payments will be stuck with single-digit consumer acceptance rates. The survey is misleading because it does not address these issues.
Yes. Security concerns will go away when the technology solution delivers enough value (convenience, savings or rewards). This is no different than the adoption of online brokerage sites and credit cards. Both had security concerns that went away. For online brokers it was savings ($7 per trade instead of $50 or $100). For credit cards it was rewards and convenience that helped consumers accept the usage and take on the risk.
The big issue with mobile payments today is there are no real advantages. NFC (Near Field Communication) is as easy as swiping a credit card, so why bother? Mobile payment solutions will need to create a large enough incentive (convenience, rewards or savings) to get consumers to switch. Part of this will also come down to retailers adoption of technology. If your favorite retailers do not accept mobile payments it really hurts the convenience story. Credit cards had to overcome this same hurdle.
Someone once said that it was a very brave man who was first to eat an oyster. It was a very brave person who was first to use PayPal, and another brave sole who was the first to use mobile for payment. Here’s the point: New technology is sometimes a little scary, especially when sensitive information is being shared (like credit card info, social security numbers, etc.). However, it is up to the industry to prove to customers that mobile payment solutions are safe, convenient and easy. One way is to give the consumer an incentive to use mobile payment. And, in the process, train the consumer.
Look at how the airline industry has trained people to purchase tickets online, check in the day before and use the kiosk at the airport. It took a long time, but it is now mainstream. They gave their customers (passengers) extra miles for booking online and using the kiosks. The incentive got them using the technology and learning how to navigate the different screens. Perhaps the first time someone bought their ticket online, it took ten minutes. By the third or fourth time, it took two or three minutes.
The mobile payment industry can take a lesson from the airline playbook on how to teach a group of customers to use their product and feel comfortable doing so.
People use credit cards because of convenience and trust; the incentive part helps determine preference and volume of usage. Convenience, I think, trumps all, and that’s where mobile payment form factor and process is still not there except for specialized applications like toll and parking payments. I still feel that pulling out a credit card and swiping is faster for general shopping than pulling out the phone and launching an app to verify payment (especially when my phone is attached to a headset in my pocket). I would love to hear any personal experience to the contrary.
Over time, and with a growing number of consumers using mobile payment systems without any security issues, the resistance of using mobile payment as a more convenient alternative to traditional point of sale payment will fade. However, the relationship building efforts of the banks and the credit card behemoths through points and loyalty programs should not be lightly regarded. These programs are working and establishing a very settled and vested customer base. They will not give up marketshare easily and will spend to defend their turf.
To that point, strong incentives with immediate or near-term gratification will be critical to the adoption rates of mobile payment programs. Retailers will need to fully understand the financial benefits of transitioning payments from the more expensive, incumbent platforms to the new, more agile and less expensive (per transaction) mobile alternative. In addition to the more obvious advantages of lower transaction fees, there is also inherent shopper loyalty built into attracting and retaining mobile payment users. Given these advantage, it shouldn’t be difficult for the retailer to understand the ROI of an investment of user incentives to gain adoption and retainer and build usage.
Incentives won’t hurt, but I think ease-of-use will be a much bigger driver — and only if security concerns can be addressed. Integration with loyalty programs could be a feature to drive early usage. If I can just wave my phone rather than digging through my wallet for a loyalty card in addition to the credit card, I may start to change my behavior.
We’re already using our phones as airline boarding passes and in many other ways that no one thought of five years ago, so I think widespread adoption of mobile payments might not be far off.
It would be more interesting to see a global consumer study in this area. We can learn how more “advanced” regions have adopted this technology and have made it a part of their daily lives with no security fears.
Incentives are good drivers for adoption, however, a rock-solid technology infrastructure is actually a more compelling reason to adopt.
I must have gotten up on the wrong side of the bed today but…why do we think we need to “motivate” consumers to use mobile? Is “not using mobile” bad for them? Are they losing something because of it? I suggest we find out what the consumer wants.
Yes, security is number one, so why not look into ways to give the consumer convenience with security? I think PayPal does this quite nicely. (No, I don’t work for them or receive payment for my endorsement.) I’m just saying that there are ways to give the consumer what they want without forcing them to use mobile when it maybe isn’t the most secure, IMHO.
Consumers’ uncertainty over payment security is clearly well founded. Mr. Percy makes this argument well. If you need further evidence, just check with the folks at Hannaford or Schnucks.
Further, this statement is interesting: “a significant number still don’t see the convenience and value of using their phones to make payments.” Just what exactly is the value? Is there really a difference in convenience?
As a somewhat recent convert to mobile technology, I certainly see all of the capabilities. However, I haven’t as yet ventured into the “payment” use of it. I have a “card” that works everywhere. Why do I need to switch back and forth from retailer to retailer?
I have seen well what can be done with this technology by Starbucks whom I consider the champion of it. Nevertheless, there is so much less exposure there vs. straight out account access.
Incentive does not always relate to value. Retailers looking to persuade their customers in this direction should first ask why. Then they should ask why again and again.
Consumers have made smartphones an increasingly larger and more important part of their lives. First and foremost, smartphone ownership increases daily. Based on the April, 2013 Prosper Insights & Analytics Monthly Consumer report, 59.1% of Adults 18+ own a smartphone; 68.5% of Macy’s shoppers own one of those devices, and 77.2% of 18-34 year olds have one.
Ownership figures from the April, 2011 survey, a mere two years ago, were 32.2% for 18+, 43.5% for Macy’s shoppers, and 50.4% for 18-34 year olds.
Once the devices are in their hands, consumers will find ways in which to make their lives easier. One in four Adults 18+ confirm that they comparison shop “regularly” via their Smartphone, and over one in three 18-34 year olds comparison shop in this manner.
Consumers are depositing checks in bank accounts with smartphones, and they will shop and pay for goods and services via these devices. There will be some trepidation, but the early adopters have already started, and this genie is not going back in the bottle.
Assuming the security concerns are resolved—and that has both real and psychological aspects—it becomes a “what’s in it for the consumer?” question.
Some shoppers are going to want to reduce the number of items they carry, including the number of credit cards, or will just want to do the “cool” thing, which will drive them to use mobile payments. But that is limited to the early adopter crowd and is dependent upon a majority of (all?) retailers accepting mobile payments for it to work.
For other shoppers, it comes down to either saving money, time or hassle. That means discounts, faster checkout and/or a more convenient processes (such as handling receipts).
If none of those benefits are realized, it becomes that classic question of “whose problem is mobile payments really solving?” The retailers? If that’s the case, adoption will be very limited and slow.
Scan-and-pay-as-you-shop will eliminate the need for checkout—the single greatest benefit from mobile payment. And this will revolutionize other features of self-service retailing as well.
Steve Jobs would NEVER have done a survey like this, for what should be obvious reasons—shoppers do not know what shoppers need until someone who should know better, tells them what they need. And they don’t need to be paid (coupons, etc., etc.,) to do what works better for them.
The first thing that needs to happen is to establish a clear winner in the virtual wallet war. One part of the winning solution will be to create a broad acceptance network that makes using the form of payment as easy for consumers as plastic with mag stripe.
With this foundation, differentiation can be created through incentives and promotions layered into the system.
There is a sweet spot at the intersection of payments and loyalty, but consumer confidence must be established first.