Enabling Technologies

Half of the people don’t really do mobile payments, popular survey disappoints!

I saw a few media portals report a survey that said, half of the people have started using mobile payments in the US. That might not be true at all. The key to understand surveys is to look into how many people were surveyed and what questions were asked and how the questions were interpreted. Also a quick look at some other surveys on the same topic would reveal a lot about the subject.

According to a survey conducted by Credit Union National Association (CUNA) more than 50% of the users that responded to the online survey have utilized their smartphones for some form of mobile payment.

CUNA used SurveyMonkey to survey the respondents. CUNA serves almost 90 per cent of America’s 7200 state and federally chartered credit unions, owned by more than 95 Mn consumer members. But only 1,046 users participated in the survey. Its a small sample size (N) to determine anything. Survey revealed that 51.1% of 1,046 respondents had used their mobile phones to make a payment. { LTP: Obviously, as the number of respondents who took the survey were less (assuming it was sent to a large number), these were the people who are generally more informed about mobile payments and a high likelihood that they might have used it }

Quick comparison with another survey - Accenture carried out a Mobile Payments survey of 4,002 adults (published in April 2013) among North American respondents with some key findings:

  • 41% of North American users are aware of being able to pay at retail outlets with their smartphone.

  • Only 16% out of these have done it.  {wow, what a contrast with CUNA survey!}

  • 45% of respondents, who were not making mobile payments stated security as their biggest concern. 37% worried about the privacy

  • Another 37% stated the ease of use of current method of payment for not utilizing mobile payments. 36% of the respondents already making mobile payments stated that they would hand over personal information in exchange for coupons and rewards.

  • 20% of non users said special coupons and reward points stored on the phone could be an incentive for them to adopt mobile payments. Only 7% of non users said they are willing to switch phones in to enable mobile payments.

Back to the CUNA survey under discussion - Some of the statistics revealed from the survey of 1046 respondents were:

  • 34% of these had spent more than $50 on the same. 9.2% spent less than $25.01 - $50. 7.6% of them spent $10.01 - $25. 3.2% spent $5.01-$10 and $0.01 - $5 was spent by 1.7% of the participants.

  • 77.8% of the participants cited security as their leading concern. { LTP: Mobile payments are generally very secure. Its true, some people are bothered about its security but 77.8% is very high given a lot of them actually did mobile payments. If you ask people about concerns, they would definitely list out things they have been hearing. A good question to ask is that, if half of them have used mobile payments, did the users really face any fraud or security issue? Perception could be different from reality }

  • 91.6% of the participants who use mobile payments gave credit to its ‘ease of use’ as the greatest benefit.

  • 6.9% stated battery life of phone as a concern and 6.4% said it was confusing to use

  • 5.1% of the respondents stated not enough rewards/bonus features and 4% only cited inability to track a budget.

  • 59.6% (by use of mobile payments) was occupied by respondents aged 30-44, 57.9% by respondents of ages between 18 and 29, 47.8% age 45 – 60, 24.1% age 61+.  { LTP: For obvious reasons the survey was skewed towards 30-44 age group who are early adopters of technology. We looked at the distribution of banked population and found out that this category has comparatively smaller US population (relatively). What does this mean? If you leave the survey aside, the other age groups would have lower penetration of mobile payments while they comprise a larger portion of the banking population }

  • Only 15% of the participants said they would leave purses and wallets at home if they could.

The respondents for CUNA’s Mobile Payment Survey consisted of 54.5% female and 47.6% male users. A household income of less than $25,000 was stated by 18.2% of the participants. Less than $50,000 was reported by 13.7% of them. 32.2% cited less than $100,000 while an income of greater than $150,000 was stated by 17.8% of the participants.  LTP: Its great that income wise the distribution of respondents was done fairly well }

What would have made things more interesting was, if CUNA had categorised the participants based on different payment enabling methods such as QR Codes, NFC,apps, etc. That way, we would also have known which mode of mobile payment (enabling technology) do they use.

Survey science requires much more focus than is usually given. Its important to understand how important a survey is based on sample size, questions asked, respondent distribution w.r.t. subject and age, income, etc.

Another Survey by Mobile payments specialist firm Zapp in September, carried out for 2000 UK consumers had some differing views but thats UK:

  • 17% of the respondents had previously made a mobile payment in UK.

  • 60% out of these utilized the service for simple bank transfer between accounts.

  • 20% of the respondents making payments stated that there are not enough people and places to make payments.

  • 18% cited difficulty in paying people who do not use the same mobile payment system.

  • 50% of the respondents said that security risk was the biggest concern

Online Shopping (69%) was rated as the most comfortable area to use mobile payments. 59% for groceries, 55% for entertainment purchases and 54% for paying bills.

Another Survey conducted by Consult Hyperion for 1015 consumers in the US says that 64% of the respondents claimed they would never use a mobile wallet at all. Of the 36% who said they would use a mobile wallet, 20% trust their banks, 10% cited google while retailers such as Walmart garnered 3% and phone companies a mere 2%.

LTP View: Yes, mobile payments are the talk of the town – big companies, joint ventures, regulators, etc. etc. But after a decade of volume + velocity of truly new and impactful ideas where are we in Mobile Payments? Around 16% people using it in the US? Ok maybe more if you believe this survey. There’s a lot of “volume” if you are in the industry and track all the startups, announcements, investments, and attend conferences but the mobile payment penetration has still not crossed the desired levels. Its not that I am not optimistic - the last two months has been more than last 2 years of traction with Square Cash, Apple iBeacons and Touch ID, Google NFC HCE approach and others. But the consumer adoption will define success.

Chiraag Patel

Chiraag Patel is a Senior Reporting Analyst and the Editor of Bitcoin and Virtual Currency channels at Lets Talk Payments. He is an engineer with deep interest in MMORPG, Virtual Banking, Game Currency and Virtual Cash. Chiraag enjoys Reading& Blogging with focus on New Innovation, Technology & Startups in the Payments Space.

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