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Is mobile payment adoption slowing?

Jun 13, 2013 Dave King

When today's retailers think about implementing electronic payments, many are considering more than just credit, debit and ACH cards. As technology advances, companies are also looking to integrate mobile solutions into their daily operations to gain a competitive advantage and boost customer engagement. However, reaching success is not as simple as just deploying these tools. In fact, businesses must consider what consumers want from their transaction options or else face the potential of their efforts falling flat.

Slower adoption on the horizon
Gartner recently announced that over the next year, worldwide mobile payment transactions will exceed $235 billion, a 44 percent increase from 2012. However, while this projected growth is still significant, it is important to note that the research firm projected that most of this progress will be driven by money transfers and merchandise purchases, not near field communications (NFC) transactions.

Gartner noted that it has actually scaled back its forecast for NFC value for 2013 by more than 40 percent because these technologies are not being adopted as enthusiastically as anticipated. The source noted that integration fell short of expectations across all markets in 2012 and also that digital wallet options are still not quite mainstream. For this reason, Gartner asserted that NFC will account for just 2 percent of total transaction value in 2012, and this indicator is expected to grow to only 5 percent in 2016.

The research firm suggested, however, that there may still be hope. As NFC mobile phones and contactless readers become more commonplace, it is likely that more merchants and consumers will gain not just awareness about mobile payments, but that they will choose to act on opportunities to participate. Without the right solutions available to make these transactions possible, customers will not be able to alter their shopping habits.

Speeding consumer use
For retailers and mobile payments developers alike, one secret to unlocking greater adoption may be increasing the emphasis on value-adds. In a recent survey of 4,002 respondents by Accenture, more than half of current mobile payments users said that they would increase their use if a few conditions were met. For 60 percent, receipt tracking options would encourage more frequent use, while another 60 percent wanted more instant coupons. Reward points to be used on future purchases could also prove to be a big draw for more than half of all respondents, as would priority customer service (50 percent).

Another way to convince consumers of the utility of these new transaction options is through boosted security. Accenture found that 60 percent of respondents do not use their smartphones to purchase items because they are worried about security. Indeed, if these solutions are created and deployed without safety as a priority, data breaches and other types of financial information fraud could occur. In some cases, such as those that lead to identity theft, patrons could experience damage to their consumer credit reports.

"While the industry is preoccupied with the technology roll-out for mobile payments, we found that consumers are still very concerned about security and privacy issues," said Matthew Friend, managing director at Accenture Payment Services, North America. "In addition, a significant number still don't see the convenience and value of using their phones to make payments. For mobile payments to achieve widespread adoption, consumers must be educated about the fact that mobile payments are secure and more convenient than other payment options."

Friend added that while one major issue is turning casual mobile payments users into more regular ones, it is also important to convince those who still haven't leveraged these transaction to start doing so. As companies address shoppers' concerns, it may be possible for the mobile payments industry to reach its full potential.