Jan. 25, 2019
By Wei Ke and Wenbo Li, managing partner and manager, Simon-Kucher & Partners
Mobile payments have failed to make a dent in the U.S. despite the fact that the share of Americans with smartphone ownership is at an impressive 77%, one of the highest in the world.
In a recent Simon-Kucher & Partners survey, we found that only one in ten smartphone users in the U.S. consider mobile as the preferred method of payment. An overwhelming majority of Americans still prefer to pay with cash, credit or debit cards.
The unimpressive rate of mobile payment adoption in the U.S. is also alarming if we consider that technology giants Apple, Google and Samsung among others have invested heavily to make mobile payment services available to U.S. consumers. Additionally, mobile payment technology is more secure compared to traditional payment methods, and the ability to consolidate payments into a smartphone instead of having to wrestle with cash, credit cards or loyalty cards affords ease, convenience and speed.
While players have invested heavily in mobile payment technology development, insufficient effort and resources have been devoted to change entrenched payment behaviors and encourage adoption in the U.S. We have also designed mobile payments offerings with the assumption that consumers are always rational; when in reality our behaviors are often instinctual, shaped by hidden psychological biases that might not always be based on fact. For these reasons and more, the U.S. consumer’s enthusiasm for mobile payments remains muted.
In a 2018 survey of 600 respondents, Simon-Kucher found many of the reasons given for not using mobile payments stems from psychological biases and misperceptions. For example, the most common reason respondents gave for not using mobile payments is because they are used to paying using traditional methods. Respondents are also not using mobile payments due to a lack of confidence in the technology: many felt they are not tech-savvy, would make a mistake, or would get frustrated trying to set up the new payment feature. Another leading reason people gave for not using mobile payments: fear of fraud and identify theft. Perhaps most telling of all is the number of people who felt paying by mobile phone takes longer.
If we want greater mobile payment adoption, we need to address these types of psychological barriers to adoption, and misperceptions about mobile payments.
Instill User Confidence
There are a number of ways we can build consumer confidence in new technologies like mobile payments. A notification sent to a smartphone as a text message or in-app confirmation when a payment transaction is completed can go a long way to ease-the-mind. An easy step-by-step set- up process to improve the experience of configuring a mobile payment app for the first time can also be helpful.
Close the Gap on Security Misperception
There is clear misalignment between perception and reality about mobile payment security. In our survey, we found that only 13% of non-mobile payment users believe that mobile wallets are secure. Specific features can be added to make users feel more secure. These include encrypted payment details, the ability to turn mobile payment on or off on the smartphone, and the ability to control when and where payment can be used. We can also do more to educate consumers and raise awareness on the security of mobile payments.
Reward Mobile Payment Behaviors
Not only do consumers need a compelling reason to switch to mobile payments, they also need a supportive environment to reinforce the new behavior. There are number of ways to incentivize and reward mobile payment behaviors, from promotional offers to discounts at favorite stores to cash back on selected purchases.
Improve the Mobile Payment Experience
A mobile payment transaction typically takes about 10-seconds to complete. However this can seem like an eternity to the user compelled to stand motionless holding a smartphone in mid-air over a terminal while he waits for the transaction to process. To reduce the perception of time we can introduce videos or interactive elements during the processing period. Showing fun facts or figures can add an entertaining element and reduce the pain of the pause.
In designing the mobile payment experience, we have simply neglected to consider the psychological, emotional and social forces shaping the U.S. consumer’s payment choices and decisions. The percentage of consumers in the U.S. not using mobile payment is significant. We estimate that there are 64% of smartphone-owning consumers who are not currently using a mobile payment app of any type.
If we want American consumers to enthusiastically embrace mobile payments, we must develop a better understanding of the factors influencing their payment choices. It is not enough to focus on the technology, but some effort is also required to create incentives and an environment that can encourage and support new payment behaviors.
Cover photo: iStock
Topics: Mobile Payments, Trends / Statistics
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