Consumers shy away from mobile payments

Consumers shy away from mobile payments

Consumers are significantly less likely to use mobile devices today to make purchases than they were last year, according to a new international study released by AT Kearney and Cambridge University's Judge Institute.

Only 12 per cent of 1600 mobile phone users surveyed in Finland, France, Germany, Italy, Japan, Spain, the United Kingdom and the United States say they intend to use Internet-enabled mobile phones for purchasing. This is a significant decline from the first study conducted by AT Kearney and the Judge Institute, in June 2000, when 32 percent of mobile phone users said they would make purchases via their mobile phones.

"The study shows that most consumers are not yet ready to make Internet purchases with their mobile phones," says Charles Coates, a London-based AT Kearney vice president in the firm's consumer industries and retail products practice. "While significant investment is being made throughout the world to bring mobile-data services to the marketplace, consumer acceptance is lagging dramatically."

The decline in consumer intent to purchase was most marked in the United States, where it fell from 34 percent in the June 2000 study to a mere three percent in the most recent study.

Fewer than one percent of respondents actually made purchases using Internet-enabled, mobile devices, with consumers in only three countries reporting a purchase: Japan, Finland and the United Kingdom.

However, while plans for purchasing via Internet-enabled devices have declined since last June, the number of uses for mobile devices is increasing, particularly among users with Internet capabilities on wireless devices. Seventy-five percent of European respondents and 57 percent of Japanese respondents use instant messaging through their mobile phones, compared to 27 percent in the US. Nearly three in four Japanese participants access e-mail via their mobile phones, far greater than the approximately one-in-four Americans and Europeans doing so.

L C (Mitch) Mitchell, Dallas-based AT Kearney vice president and communications industry practice leader, comments: "The intent to purchase may be low today, but people are using Internet-enabled technology in other ways."

Cambridge Business School Professor Chong Choi adds: "Mobile phone use appears to be going through an evolutionary cycle: first for voice communications, then as a text-based communications tool (e-mail, short messaging services) and finally as an Internet-enabled purchasing tool."

The study suggests the mobile industry must act quickly to reverse the decline in Web purchasing intentions and must find more effective ways to promote the whole concept of m-commerce in order to recoup the value of its huge investment in network licenses and infrastructure.

According to the study, rapid growth of Internet-enabled purchasing through wireless devices is slow because consumers have not been convinced of the advantages that the technology offers versus traditional channels. Twenty-six percent of consumers in the eight countries studied cited lack of interest or perceived need as the single largest reason for not intending to purchase products and services via their mobile devices. Concerns about comfort and ease of use (19 percent), data security (16 percent) and lack of time (16 percent) were among the other reasons given.

"The mobile industry's three main segments - service providers, hardware providers and content providers, as well as the retail industry - must explore ways to act together to demonstrate the benefits of mobile commerce to consumers," says Mitchell. "If the parties don't work together to bring the digital customer experience to life, there is substantial risk that consumers will be slow to embrace m-commerce."

Joint consumer marketing among service providers, hardware providers, and content providers could take many forms, says Coates. "These could include agreements to orchestrate the timing of new hardware and service launches; development of new devices, services and intelligent multi-device Websites; collaborative concept marketing; and joint promotions."

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