Show me the money! Are consumers ready for smart payment methods?

Are consumers ready for smart payment methods?

Are consumers ready for smart payment methods?

There is growing enthusiasm among banks and payment providers to offer faster and more convenient ways to allow consumers to pay for goods and services in response to the eagerness with which we embrace new gadgets and technologies. But are consumers – even those who have already adopted and adapted to smartphone technology – ready for these new smart payment methods?

A September 2013 Harris Interactive survey of 2,577 Americans over the age of 18 showed growth in the percentage of Americans who have experienced smart payment options firsthand. But there is still a struggle to earn consumer interest.

While the majority of Americans anticipate that tap-to-pay will eventually replace payment cards and cash transactions in the future, they are not expecting it in the near future. According to the survey results, only three in ten Americans believe such transactions will replace payment card transactions in less than five years, and only one-fourth think that technology will replace cash transactions within that same time frame.

Interestingly, the new survey finds that even more smartphone users think that tap-to-pay transactions will never replace payment cards or cash transactions than thought so in 2012.

There are two primary reasons given for the lack of interest.  Fifty-three percent indicated a simple lack of compelling motivation; in other words, they just don’t see any reason to switch from cash or payment cards.

Security, as always, is the other top impediment. Those uninterested in using a smartphone to process in-person transactions are not only concerned about storing sensitive information on their phone, nearly half of the respondents indicated they are reluctant to transmit sensitive information to a merchant’s device.

Another factor has entered the mix that may be slowing the adoption of smartphone tap-to-pay: businesses are creating “smarter” cards.

Companies like PayPal, Coin and Google are offering a compromise of sorts. PayPal offers a physical debit card in a partnership with MasterCard, while Coin is an all-in-one credit card that not only consolidates your payment cards, it allows you to choose among them with a single tap. Google Wallet is a smartphone app and online payment service that lets consumers buy goods and transfer money to each other.

It is likely that the “smart card” technology will be the bridge that allows consumers to safely navigate over the rough start-up period of smartphone tap-to-pay.

While currency and checks are far from facing extinction, mobile technology is changing the way payments can be made and accepted. And, as these new payment methods become more secure and refined, there is no doubt that consumers will be more at ease with their use.

By Brenda Spandrio

For more information:

Future of Mobile Payment Systems: Rise of the Mobile Wallet 2012-2017

Smartphones: New User Paradigms and Behaviors

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