Why We Should Accept Mobile Payments

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Mobile payments are the newest technology to challenge how we think about our offline purchases, but if trends continue, it’s likely that it’ll become part of our daily life.

My first encounter with mobile payments was just a few weeks ago (I missed out on the initial Apple Pay buzz, like most smartphone users as it requires an iPhone 6 or 6+). I paid for my groceries with my fingerprint so fast that I hardly realized it had actually worked. But I admit, it was pretty cool, so why isn’t it more widely used?

Generational Differences

Security and privacy remain major deterrents to mobile payment adoption. As to be expected, Generation Z (18-24-year-olds) are the most confident generation that believes their mobile payments are 100% secure. Conversely, less than 20% of the population aged 35 - 68+ had the confidence that their mobile payments were totally secure. My parents, which fall into that wide generation definition, couldn’t imagine using their phones to pay because for them, cash and check (yes, old school checks) are still their safest bets.

Security and Familiarity Trumps All

But is security actually a barrier to entry? With Apple Pay, available only with the new iPhone 6 and iPhone 6+, Apple uses a unique device account number and encrypts that number before storing it. The number is not stored on the device itself. When you go to make a purchase, the iPhone uses a token system to make sure that your credit card number is never transferred to vendors when you use Apple Pay. As a last security measure, Apple Pay purchases require your TouchID (fingerprint) to activate the purchase. Google Wallet provides security prevention including 24/7 fraud protection and a required PIN before any transaction occurs to keep user’s minds at ease when they use the app.

Other large barriers to entry include a lack of familiarity, which is understandable as it’s a major mindset shift. 30% of iPhone 6/6+ users that have not tried Apple Pay yet responded that they were satisfied with their current payment methods. As familiarity with NFC (near-field communication) technology grows, mobile payments will likely gain more traction.

However, a surprising amount of people had positive Apple Pay reactions after using it during the shopping crazed Black Friday weekend. In comparison to credit or debit cards, users of mobile payments reported that it was easier, faster, more secure and more convenient.

Welcome to the Future

With our phones attached to our hands at most times of the day, it’s not a far stretch to have your phone as your new wallet. However, credit and debit cards are still miles ahead of mobile wallets. Technology is somewhat of a limitation; Apple Pay requires the newest iPhone (6 or 6+) and Google Wallet has requirements based on what operating system your phone is running. Retailers are also limiting the use of mobile payment methods. In late 2014, CVS and Rite Aid drew ire from consumers after shutting down their POS systems to be compatible with Apple Pay, choosing instead to launch their payment system, CurrenC. User preference is still strongly rooted with plastic. According to eMarketer, 63% of adults (1,000 surveyed) predict that credit and debit cards will still be the primary method of payment in 2015.

But attitudes are shifting towards mobile payments being more widely used within the next five years. Adoption rates will likely hinge on retailer’s attitudes towards point of sale systems that allow mobile wallets. The more places to use your phone to pay, the more awareness and familiarity there will be. Welcome to the future, where your wallet is your phone and your signature is your fingerprint.