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Identity theft, payment fraud and data privacy concerns remain the biggest barriers to mass adoption of mobile payment services, according to an Inside Secure survey of 1,217 American consumers.
The survey revealed that 17 percent of respondents who did not make holiday purchases with their mobile phone last year, plan to use a payment service such as Apple Pay, Android Pay, Samsung Pay or a proprietary service from their bank or card issuer to make the leap to mobile payments this holiday season.
The research reveals growth in the popularity of mobile payment services this holiday season, but people who are not planning to use their phone to make in-store holiday purchases are more concerned about payment fraud, data privacy and identity theft than those using their mobile device this holiday season.
“The payment industry needs to engage in awareness and education. As our survey results show, security issues are by far the primary impediment to adoption,” Trevor Daughney, executive vice president of Inside Secure USA, told eWEEK. “To overcome concerns, banks and other issuers offering a proprietary payment app need to message security in their lead message. They should also explain how they are handling their customers’ data, for example, are they keeping payment data separate the other data on the mobile device, and are they storing it on the device?”
Seventy percent of people who are not planning to use their smartphone to make in-store holiday purchases state that their concerns about identity theft prevent them from using in-store mobile payment applications.
Seventy percent state that their concerns about mobile payment fraud prevent them from using in-store mobile payment apps, and 71 percent stated that the privacy of their transaction data was a top concern.
Nearly 40 percent of respondents said they do plan to make in-store holiday purchases with their mobile device this year, compared to 33 percent last year.
Men (53 percent) are ahead of women (47 percent) in their plans to use mobile payments this holiday season, and mobile payments are most popular with people 18-44 years of age.
Nearly two-thirds (64 percent) of consumers planning to use their smartphone at the point-of-sale are between the ages of 18-44 years old versus 36 percent of consumers aged 45 or older.
The survey also found iOS users are more likely than Android users to be using mobile payment services at the POS this holiday season–45 percent of iOS users will make a mobile payment, whereas only 26 percent of Android users will do so.
“Mobile payment apps are going to proliferate like bunnies. At a minimum, banks and other card issuers want to maintain their relationship with their customers, get visibility for their brand and have and timely access to their customers’ transaction data,” Daughney said. “But mobile banking is also an opportunity for banks to deepen their customer relationships. Unlike traditional debit and credit cards or third party mobile apps, a proprietary app allows the bank to interact directly with their customers.”