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In-store mobile payments fail to take off in North America

19 October 2016  |  8081 views  |  14 Walmart Pay

The number of North Americans using their mobile phones for payments at the point of sale has remained flat over the last year, despite growing awareness of the technology and a drop off in the popularity of cash, according to a survey from Accenture.

With banks, retailers and tech giants such as Apple and Google pushing the technology, 56% of 4000 Americans and Canadians quizzed by Accenture are now aware of mobile payments, up four per cent on last year.

Yet the regular use - at least weekly - of mobile payments remains flat at 19%, way below the numbers for cash and cards.

Although there has been a drop of seven percentage points in the number of North Americans using cash in store at least once a week, 60% still use paper money. Debit card use has remained flat at 59% and credit cards have seen a three percentage point bump to 53%.

There is some optimism about mobile wallets, with survey respondents predicting a 60% increase in the use of options provided by card networks and tech giants by 2020, although this would still mean less than a quarter of the population paying by phone.

"The existing payments system isn’t broken, which is why consumers are not making a mass-move to mobile phone payments adoption - the incentives are not there yet," says Michael Abbott, MD, Accenture digital, financial services, North America lead.

"Today’s mobile phone payments options provide basic, first-generation functionality; it’s like running an Atari game on an Xbox system - amazing underlying potential, but only providing a very basic offering. Consumers expect more in today’s fast-paced digital environment; just the ability to tap-and-pay is not enough. Payments providers need to bring the traditional card to life and create a real-time interactive experience for consumers."

There are no clear favourites when it comes to which providers will win over mobile customers. Nearly three-quarters say they trust traditional card providers the most as their mobile payments provider, compared to 63% for alternative payments providers like PayPal, 62% for established retail banks, and 59% for large tech companies.

Of those who have used mobile payments apps in store, respondents most frequently use their bank’s mobile app (26%), and three quarters say they are satisfied with this experience.

Millennials and those earning over $100,000 annually after taxes are natural segments to target, says Accenture. More than half of both groups consider themselves to be among the first to try new technologies and nearly one-third are extremely interested in initiating payments transactions using wearables or smart devices, such as refrigerators and cars.

Read the full report: » Download the document now 2.8 mb (PDF File)

Comments: (14)

A Finextra member
A Finextra member | 19 October, 2016, 10:20

Money only exists and works because we all believe in it, and trust that in accepting it in exchange for a given good or service that we produce, we can later exchange it again for a good or service that someone else produces of an equivalent value. There's a big difference between cash in your hand and a credit card payment type, and a mobile payment. Do we really trust our smartphones have not been hacked in some way? how much of what we read about mobile payments is pure hot air? "In our mobile phones we trust"...but do we really? 

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A Finextra member
A Finextra member | 19 October, 2016, 12:58

Today there appears to be a market in RF Proof card wallets to protect cards from being scanned whilst in your pocket... if you apply the logic of the purchasers of these RF proof wallets to mobile payments then they may need an RF Proof Mobile phone  case.... except.....that... the phone wouldnt work due to no signal.....   But seriously......  Is anyone surprised mobile phone use is flat... as the article says, payments are not broken, generally th consumer has made a physical choice - Debit/credit/amex/mag stripe/Chip (+ signature?really?) or contactless... BEFORE they reach the till or whilst the retailer is scanning/bagging/brewing/toasting....   Maybe the argument in australia is a storm in a Fosters glass?   we will see... based on this i dont think the Aussie banking system has much to worry about.... they love their contactless cards and Aussies wont like Applepay giving Aussie banks a hard time.... thats the job of the Aussie population and government!!!

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Steve Wainwright
Steve Wainwright - Gemalto - Bordentown | 19 October, 2016, 13:02 The primary difference between cash & other forms of payment for the consumer at the POS is anonymity. Nobody in the payment system knows who is buying. Other than that consumers can have equal faith in cash or cards/phones. Between cards & phones it's arguable that phones are safer. Unlike my wallet I need biometric authentication, a fingerprint these days, or I enter a passcode. It is therefore safer to lose a phone than to lose a wallet with cards in it.
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A Finextra member
A Finextra member | 19 October, 2016, 13:08

"Of those who have used mobile payments apps in store, respondents most frequently use their bank’s mobile app (26%)..."

As a European I don't remember hearing about such mobile in-store payments in North America. Is it NFC or QR codes or something else?

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A Finextra member
A Finextra member | 19 October, 2016, 13:20 Where you do see it In the US it is mainly Apple Pay or Android Pay via NFC.
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A Finextra member
A Finextra member | 19 October, 2016, 14:06

Sadly Steve,  my iphone fingerprint recognition is broken.  happily, i dont need it - i have contactless credit and debit cards and i am able to transact happily without needing to use my phone.

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Dinesh Katyal
Dinesh Katyal - Xero - San Francisco | 19 October, 2016, 19:27

It is only a matter of time. The biggest barrier is the inconsistent implementation at the point of sale, and a natural learning curve - yes there is a learning curve even with mobile :). Also, in most places there are no brand/ or visible markings indicating mobile acceptance. It is primarily because the acceptance networks don't have a monetary incentive to squat about it. It is also the reason why the acceptance network dragged their feet forever on chip, and even now have only implemented chip & signature. Same old story of incumbents too lazy to move their fingers just for the sake of new tech esp when it costs them money for no obvious gain. 

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 19 October, 2016, 19:47

"It is only a matter of time" will go down as the most oft-used line about mobile payments. I think I first heard it 7 years ago and have been hearing it repeatedly year after year. 3 years ago, I said 

Mobile Wallets: Fix What's Broken - And It Ain't Payments

Good to see it's still the case, as reiterated by Michael Abbott: "The existing payments system isn’t broken, which is why consumers are not making a mass-move to mobile phone payments adoption".

I predict that mobile payments will be replaced by something else well before they succeed in replacing plastic.

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Dinesh Katyal
Dinesh Katyal - Xero - San Francisco | 19 October, 2016, 19:56

I read your post, and it is very much on the money. The essential point I'm making is that there aren't any financial incentives on part of the acceptance networks to make lives easier - either on loyalty or payments. Most retailers now allow you to simply put in your phone number to get rewards. I haven't carried a reward card ever. With payments, most people are used to carrying 1 or 2 cards, and swiping is still the most widely available, consistenlty predictable, fastest and easiest method. Mobile offers a leap ahead but unless the acceptance networks play ball or till consumers drive it via lost sales when a merchant doesn't take Apple Pay, don't expect it. It will eventually happen either via phone or activity tracker or whatever else replaces the phone as the convenience factor is indisputable, and security is very high. Or, it may take someone like Square to goad the industry forward.

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A Finextra member
A Finextra member | 19 October, 2016, 22:26 Exactly right Dinesh. I would add that for the demographic that spends the most paying by phone is a novelty. We are probably a generation away from shoppers who will insist on it because they want as much as possible on their phone. Security is the most compelling reason from the consumer viewpoint but it never has and never will trump habit or familiarity. If security really mattered consumers would occasionally change passwords & they rarely do that. Card issuers & payment processors don't care because fraud costs peanuts compared with revenues.
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A Finextra member
A Finextra member | 19 October, 2016, 23:05

"Of those who have used mobile payments apps in store, respondents most frequently use their bank’s mobile app (26%)..."

I'm still confused about this quote. Is it a lie or a misunderstanding? How do you pay in store with your bank's mobile app in North America?

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Dinesh Katyal
Dinesh Katyal - Xero - San Francisco | 19 October, 2016, 23:11

A good catch! I have no idea what that means

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 20 October, 2016, 13:23

@DineshKatyal:

TY for your reply. It has equally well been my experience that, since I wrote that post 3 years ago, a number of retailers have replaced plastic loyalty cards with mobile phone #, so the value proposition of the "loyalty card replacement" use case I'd envisaged for mobile wallets in the post has diminished in the meanwhile.

To summarize, mobile wallets are not solving a significant problem - either for payment cards or loyalty cards.

Turning to fitness trackers and smartwatches, they surely blend better than plastic or smartphone form factors for many payment contexts. In theory, they should progressively replace plastic. However, in actual practice, I'm not so sure: In the late 1990s, Singapore implemented a road toll system based on the so-called ERP card. Affixed to the windscreen of a car, ERP let motorists drive at normal speeds past toll booths, with the said toll charge being automatically deducted from the card. By obviating the need to stop and queue up at toll booths, ERP solved a huge problem and truly blended in with the payment context. However, 20 years later, such a payment form factor hasn't become ubiquituous worldwide. Therefore, I'm not so sure of alternative form factors making a big dent into plastic anytime in the forseeable future.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 20 October, 2016, 13:39

@FinextraMember / @DineshKatyal:

ChasePay is a mobile payment offering from a bank and it supports instore payments in USA. 

http://www.businesswire.com/news/home/20161019005338/en/Wakefern-Accept-Chase-Pay

Going by the technology used by my bank in India to support instore mobile payments on its mobile payment app PayZapp, I'd hazard a guess that ChasePay works on QR code.

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