Give Consumers Incentive to Adopt Mobile Payments

There's a huge disconnect in the mobile payments world today. Banks, retailers, mobile network operators and equipment manufacturers are preoccupied with the technology rollout. Will near-field communication payments, cloud wallets, QR codes or some combination of these be the next big thing, they wonder.

But consumers have a completely different mind-set, namely, "What's in it for me?" They are not waiting for the broad availability of one particular system. They want to know what value they'll get from using their phones to make payments. They are also very concerned about convenience, privacy and security. 

Accenture recently surveyed 4,000 smartphone users in the U.S. and Canada to better understand how consumers can be encouraged to make mobile payments a bigger part of their lives and help financial services companies capture growth in this highly promising market.

The survey results suggest that merely making mobile payment infrastructure available to consumers is not enough. To attract more frequent and valuable customers in the long run, and obtain valuable information about their location and purchase history, mobile payments players should also incentivize consumers through rewards or other value-added tools to encourage wider adoption.

The survey highlights why consumer adoption of mobile payments has been slow to date, and how mobile players can bridge the gap between consumer awareness and adoption:

• Hesitant consumers. Many consumers know that mobile payments are an option, but still do not make them. Some 41% of North American phone users are highly aware that phones can be used as payment devices at retail counters, yet only 16% have actually used them to make payments.

• Security, privacy, convenience. Nearly half of smartphone users who do not currently make mobile payments told us they were concerned about security, while over one-third worried about privacy. Some 37% said they did not make mobile payments because they find paying by cash, check and credit card more convenient. To achieve widespread adoption, consumers must be educated about the fact that mobile payments are as secure and convenient as other payment options.

• Uninformed consumers. A surprisingly high percentage of mobile phone owners – nearly one-third – aren't even aware that their phones can be used to make payments. And nearly two-fifths haven't downloaded the necessary application to make mobile payments. Clearly, getting people to use this technology in the first place is the industry's biggest challenge.

• Enticements wanted. Sixty percent of consumers who already make mobile payments said they would probably do so more often if they received instant coupons from retailers, while some 36% said they would hand over personal information in exchange for such rewards. Rewards points from retailers, special pricing based on past usage, a dedicated payment line in store or priority customer service also received strong support. About one in five respondents who don't make mobile payments would reconsider if they received coupons, reward points or other incentives.     

• Filling up the tank. Paying for a cup of coffee isn't the only thing consumers want to use their mobile phones for. More than half of those currently making mobile payments said that they would do so more often if they could buy gas at the pump with their phones. Additionally, over half would pay by phone more frequently if they could use their phones to track receipts, manage their personal finances and show proof of a driver's license or valid insurance.

Providing the opportunity for consumers to make mobile payments in a broad variety of situations is obviously crucial, but not enough. Financial institutions, merchants, mobile network operators and technology providers also need to educate consumers on the benefits, assuage their privacy and security concerns and ensure applications are supported by a range of smartphones and wireless networks to make them convenient to use.  
As Accenture's survey makes clear, developers should consider incorporating rewards and other tools such as receipt tracking in new mobile payment applications to promote broad adoption. Today's consumers expect their smartphones to improve and simplify their lives. Give them the desired tools and they will use them.

Jim Bailey is managing director and head of Accenture Payment Services in North America. Matthew Friend is managing director of Accenture Payment Services in North America.