Almost all forecasts which have looked into the subject have found that a majority of new mobile phones sold in the U.S. market are likely to be smartphones in the near future.
Sales of these pocket-sized computer devices are growing very rapidly, and as older handsets require replacement, smartphones will be the most likely devices to replace those older models, mirroring the trend for brand new handsets. Pew Internet found that nearly half (46%) of all American adults were smartphone owners as of February 2012, and the share is likely to continue growing for the foreseeable future. There have been simultaneous predictions that smartphones could soon dominate the U.S. payments landscape by enabling consumers to use their smartphones instead of other forms of payment, either via contactless chips that could be read at terminals (similar to contactless cards), or via downloadable applications. So far, however, predictions for smartphone devices replacing payments cards have proven to be premature, and the use of smartphones for payments is unlikely to be the primary motivation in selecting either a new mobile carrier, or a new phone.
According to the latest research from The Payments Report, a syndicated research report published by the Auriemma Consulting Group (ACG), less than a third (30%) of all respondents said they would switch handsets in order to use their cell phones to make purchases. This figure was only slightly higher among consumers under age 45 (41% vs. 20% among older respondents). Just 23% of consumers say that they would consider switching mobile telephone providers in order to obtain a phone that has the ability to facilitate mobile payments. ACG research also suggests that nagging consumer concerns about mobile security, along with very high levels of satisfaction with existing payment methods will likely challenge wider adoption of emerging mobile payment methods in the short-term. A majority (66%) of respondents who are unlikely to use a mobile wallet say they are already satisfied with their current payment methods, while 73% of consumers are worried about security.
Dr. Patricia Sahm, Managing Director at ACG, says, "Traditional, plastic-based payments remain an effective, efficient, and convenient way to conduct purchase transactions". She adds, "The appeal of using new technology is significant, but merchant acceptance must be widespread in order for it to be adopted widely".
In the interim, there are still opportunities for developers of mobile payments technologies to help advance both the technology and consumer acceptance of it. She cites the basic protections in Federal Reserve Regulation Z, which limits consumer liability for unauthorized credit card transactions to the first $50 as an example of the type of consumer protection which helped credit cards to become as widespread as they are today. Although those same protections do not exist universally for debit cards, a number of banks also extend them to debit. "Voluntary adoption of similar consumer liability limitations for mobile payments could go a long way in providing consumers with the peace of mind to comfortably use mobile payments technology." Beyond that, she also sees more standardization at the point-of-sale as another factor which could help advance more widespread adoption. "The card networks became so ubiquitous by providing retailers with a convenient form of payment that functioned efficiently with virtually all retailers' point-of-sale designs. Having similar standardization for point-of-sale could help to advance mobile payments." She believes that mobile payments offer some exciting opportunities for the future, but says a number of important issues still need to be addressed before these new technologies can become as widely-adopted as payment cards are today.