Public Is Slow To Embrace Mobile Payments
The fast-advancing mobile payment industry seems poised to transform how shoppers complete purchase transactions. However, due to consumer security concerns and the cost to retailers of implementing the necessary hardware at the point-of-sale, many speculate that it will still be a couple years before pay-by-phone transactions really take off in America.
Throughout 2011 the news has been full of reports about the burgeoning mobile payment market as companies such as PayPal, Visa, MasterCard, American Express and Google, along with several cellular service carriers and assorted start ups all vie for position in the lucrative up-and-coming digital payment sector.
In fact, there are many big-ticket retailers getting on board with mobile phone payments by partnering with payment processors and banks in order to give their customers the option to pay for items at the point of sale by tapping their phones in lieu of swiping a card. However, experts predict that this new method of paying for purchases will not really catch on until a couple of years down the road.
A recently-completed study conducted by global professional network KPMG revealed that currently only 23% of consumers indicate a willingness to pay by using their mobile phone as opposed to other payment options.
While shoppers in larger cities such as Chicago, New York and San Francisco are increasingly open to paying for goods and services by phone, estimates have been that it will take anywhere between 2 and 4 years before widespread adoption elsewhere in the country.
The biggest obstacle faced by the new payment method is consumer concerns about security and safety. Champions of mobile payments will have to convince consumers that paying using their smart phone is easier and at least as secure as using cash, debit or credit cards.
“Multiple things must come together. Mostly, consumers need to have the right amount of knowledge and education about the technology, and retailers must be able to accept mobile payments,” said Richard Mader, head of the technology division of trade group National Retail Federation, according to Reuters.
Another hurdle, in addition to security issues, is the cost for retailers to install contactless payment terminals and the availability of such devices for consumers to use. Presently in the United States there have only been approximately a half-million NFC readers installed in retail point-of-sale locations.
However, the research firm Aite Group predicts that pay-by-phone transactions will reach $2.1 billion in 2012 and soar to $22.6 billion by the year 2015.