Smart phone penetration has reached an all-time high in the UK at 60% and rising, a trend that stands to benefit mobile wallets greatly in 2013. ICM Research, however, isn’t buying it and the research firm’s recent report gives three major causes for concern.
The first of ICM’s concerns lies with the market itself, stating that the public simply isn’t prepared for the mobile wallet revolution. ICM’s research ran through Christmas 2012 and found that contactless payment — considered the entry point for the mobile wallet — is still far from maturity in many markets.
ICM reported that consumer awareness is relatively high at 80%, but with only 8% of people actually making contactless transactions, the general public is largely unprepared for the mobile wallet.
Reasons for this lack of adoption, according to ICM, are the result of the perceived shortcomings of mobile wallets. Citing specifically the lack of retailer support, a dearth of terminals and little or no in-store promotion, consumers simply aren’t being engaged on the retail end of the spectrum.
Also troubling for mobile wallets are consumer security concerns that have not been addressed— what happens in the event of lost/stolen devices and phones running out of battery? These are primary concerns that must be comprehensively addressed if mobile wallets are to realize the potential that many have projected.
A second concern raised by ICM’s report lies with smart phone users, specifically the overwhelming lack of tech understanding and awareness. Smart phone penetration is a moot point if consumers aren’t aware of their device’s capabilities.
M-commerce is growing in popularity, but transactions conducted on a mobile handset comprise a very small fraction of the overall market. ICM found that consumers’ security concerns increased their willingness to accept pin numbers and other measures as opposed to the more casual ‘wave and pay’ method employed by contactless paying.
Smart phone penetration, then, is only one piece of the puzzle and there likely needs to be additional measures taken to solidify the mobile wallet as a viable payment solution.
ICM maintains that mobile brands would do well to connect with their customers using mobile tools they are already comfortable with, particularly apps. ICM only found one major retailer during this past Christmas season that was using apps designed to aid in Christmas shopping.
The final concern that ICM raises with regards to mobile wallets is that NFC-enabled smart phone production is not keeping up with the pace that mobile wallets have set. Mobile wallet apps and mobile payments are useless without the driving force of NFC.
The age-old argument over mobile devices are that smart phone users tend to be tied to long-term contracts, and 2013 will be no different. Furthermore, customers certainly won’t break a contract just to get an NFC-enabled device.
In order for the mobile wallet to see increased adoption in the New Year a few things need to happen, and fast.
First, the public needs to understand that there’s more to mobile wallet apps than just an alternate means of payment. Mobile wallets also enable management of vouchers, discounts, loyalty cards, event tickets and public transport passes all from the palm of your hand.
However, the utilities of mobile wallets aside, security concerns will always be a barrier to adoption. These concerns need to be addressed head-on and must be accompanied by more terminals and in-store promotions.
See the full story from IBC Research, and key facts from the report here.