What’s Next for Banks, Payment Networks and Retailers Now That Mobile Payments Are Here to Stay?

New Study from Kurt Salmon Highlights Steps Toward Broad Consumer Adoption

NEW YORK--()--Coinciding with the recent announcement of Apple’s mobile payments solution, a new report from global consultancy Kurt Salmon shows consumers are well positioned to make the transition to mobile payments—with a little help from banks, payment networks and retailers. The report, “Why the Apple Pay Launch Means Mobile Payments Have (Finally) Arrived,” is based on the results of consumer surveys on U.S. mobile payments usage conducted by Kurt Salmon in 2012 and in 2014.

“Apple’s entry into the field sends a clear signal that mobile payments are here to stay,” said Michael Archer, a partner in Kurt Salmon’s Global Financial Services practice and co-author of the report. “The business case is well established along the entire mobile payments value chain, but our survey results prove that banks, payment networks and retailers still have work to do to persuade consumers to change their behavior.”

Security, Rewards, Convenience Top Consumer Considerations

The mobile payments report identifies the consumer characteristics, interests and opinions critical to making mobile payments more attractive to a broader audience.

Security is top of mind for active users of mobile payments—defined in this study as consumers who prefer to pay for in-store purchases with their mobile devices. More than 40% of active users worry that their personal information is at risk when making mobile payments, while 37% believe that making an online purchase via smartphone is not secure.

“Mobile payments technologies must achieve a critical mass of consumers in order to succeed,” said report co-author Jason Goldberg, senior manager with the Global Financial Services practice at Kurt Salmon. “Demonstrating and communicating the security of the technology consistently and unambiguously is going to play a big part for banks and retailers in earning consumer trust and achieving mass adoption. Issuers, retailers and merchant acquirers will have to work together for this to be successful.”

Rewards and loyalty programs were the primary motivator for using a smartphone to make payments among 61% of active users. More than 60% of active mobile payment users regularly check their phones for discounts from local and national merchants, and 64% sign up for as many rewards and loyalty programs as possible.

The profile of active mobile payment users also shows convenience to be a powerful motivating factor in consumer adoption of mobile payments, indicating the importance of collaboration among banks, payment networks and retailers to ensure transactions are accurate, efficient and fast.

“Convenience presents a challenge, as few of the 9 million U.S. locations where credit cards are accepted can currently accept mobile payments,” Archer explained. But the arrival of Apple Pay just ahead of next year’s mandated shift to EMV chip-and-PIN technology in the United States opens up new possibilities. “Replacing or upgrading payment terminals will be costly—about $7 billion across the country, according to our analysis,” added Archer. “But the opportunity now exists for retailers, service providers and banks to consolidate their mobile and EMV investments into one upgrade.”

Headed Toward an Evolution in Consumer Payments

The report lays out a clear course ahead for mobile payments participants to drive widespread consumer adoption of mobile payments by seizing the opportunity presented by EMV, leveraging loyalty and rewards programs, and demonstrating the security of the technology.

“We’re working toward a tipping point of broad adoption of this technology that, when it happens, will spell the most significant evolution in consumer payments in more than two decades,” Archer concluded.

About Kurt Salmon

Kurt Salmon is a global management consulting firm dedicated to building the market leaders of tomorrow. More than just partnering with our clients, we ally with them, integrating ourselves seamlessly into their organizations in order to develop innovative, customized solutions for their 21st-century business issues. Succeeding in today’s increasingly complex, consumer-driven environment is an enormous challenge. But companies need to look beyond today; they need to position themselves for continued success in the even more uncertain future. That’s where Kurt Salmon comes in. We call it delivering “success for what’s next.” The results are transformative.

Visit http://www.kurtsalmon.com/ to learn more.

Contacts

Press:
For more information or to arrange an interview with Michael Archer or Jason Goldberg:
Evan Stisser, 212-221-4616
Evan@blissintegrated.com

Release Summary

A new study from Kurt Salmon highlights the steps banks, payment networks and retailers need to be taking to push broad consumer adoption of mobile payments.

Contacts

Press:
For more information or to arrange an interview with Michael Archer or Jason Goldberg:
Evan Stisser, 212-221-4616
Evan@blissintegrated.com