Why Hasn’t Mobile Payment Really Taken Off?

Digital payment options have become commonplace in today’s society. In fact, ever since people could purchase goods and services off of the Internet, some of the world’s most successful companies are a result of digital payment. It was a natural progression then, as the mobile device boom came, that mobile payment would take the place of cash and/or cards and bring these digital payment options beyond the Internet, and into our retail stores. This simply hasn’t happened and here are four reasons why.

The Tried and True Payment Still Works
The first reason is simple. Retailers still accept cash and credit cards. Why would anyone who has been using these tried and true methods of payment for 20-plus years change things up? According to First Annapolis Consulting’s “Study of Mobile Banking & Payments”, while 64 percent of all smartphone users have used some form of mobile payment platform, only five percent consider themselves frequent payment users. The fact is that it’s not as attractive as you may think, and is further relegated to the background because...

There is a Lack of Incentive
What added value does a mobile payment service actually offer? Sure, in some states that have gone to a digital ID system, this would seemingly allow consumers to forgo the wallet completely. That’s it. Most mobile payment interfaces make it difficult for users to redeem loyalty points or take advantage of special offers at mobile point of sale machines.

There are companies, such as Starbucks, that have made a point to integrate their loyalty points system into their mobile payment platform. Their mobile app combines the loyalty point program with mobile payment options, which is great for consumers. But like the consumers themselves, if a company doesn’t see an immediate (or even long-term) demand, they will avoid laying out the capital until that demand is present.

In order for mobile users to take full advantage of the mobile payment platforms, you will need to give them some form of incentive to use it. This is mainly since...

Mobile Payment Actually Takes More Effort
One of the claims that mobile payment providers make is that it is much easier to use than any other type of payment. Just tap and go. While this seems reasonable on the surface, the reality of it is that it takes just as long or longer to access your mobile payment platform through your smartphone as it does to take cash or a card out of a wallet. Consider for a minute the steps you have to take in order to make mobile payment work: You have to take your phone out, unlock it, access the mobile wallet app, select which card you want to use, and then hold your phone to the terminal. After this they still need to either sign the screen/paper or provide a pin. Why take so much effort to make purchases when it takes less time to buy goods in a traditional way; and, still have to deal with…

Mobile Payment Security Concerns
To be fair, mobile payments may be as secure as any other form of digital payment, but there is an inherent fear in many consumers’ minds that because there is an all-digital transmission of financial information that it is somehow less secure than traditional digital payment options. This fear isn’t unfounded, as each day people can read about data breaches at banks, stores, and major online retailers, that only work to fuel the anxiety surrounding mobile payments.

Many cyber security experts have cautiously endorsed the use of secure payment apps, while others point to studies like the 2015 Mobile Payment Security Study that overwhelmingly urges a wait-and-see approach, but does admit that the industry is making headway in the security of mobile financial transactions with the inclusion of account tokenization, device-specific cryptograms, and multi-factor authentication.

In the future, mobile devices will become the only computer we’ll need, but will they become the only wallet we’ll need? Only time will tell.