Top 3 Barriers to Adoption in Mobile Payments

In late December, we began witnessing an anticipated daily barrage of “lists” featuring 2013 predictions regarding mobile industry developments that would supposedly transpire inside the next twelve months.

Five months into the new year, it’s apparent that some of these predictions are already on the path to being realized.

In Chetan Sharma’s January 2013 mobile predictions survey, 35 percent of respondents indicated mobile payments will be the biggest standout in mobile breakthroughs this year.

“Our industry seems fascinated with the potential of mobile payments and voted it to be the top mobile applications and services category for 2013,” the report reads.

So far in 2013, the high expectations for mobile payments haven’t been for naught. Prosper Insights & Analytics says that as of late January, three out of four users (77.1 percent) conducted banking activities using a smartphone or tablet this year. What’s more, 57.9 percent admit to engaging in shopping behaviors via mobile.

Today, however, the majority of mobile payment transactions consist of those  facilitated by a consumer swiping their credit or debit card into a mobile credit card reader. But despite the rampant growth of this form of payment, barriers to adoption certainly still persist.

“Skepticism abounds regarding the usefulness of mobile payment methods,” says the team at PayAnywhere in a recent blog post.  “Given all the apparent convenience of such forms of payment – from the convenience of not carrying cash to the security of having money stored under digital lock and key – one could only wonder what has caused some analysts to voice doubts about this seemingly inevitable phenomenon.”

According to PayAnywhere, one of the nation’s top mobile payments providers, there are three primary barriers to adoption in mobile payments today.

Security Issues

One big concern that many consumers have with the concept of paying via mobile apps involves data security. After all, cards and checks have long proven to be safe methods for the transfer of currency – provided that a checkbook is never stolen or a card is not somehow accessed by a third party. With mobile processors, many users worry that sensitive data could leak to the wrong hands. Some customers fear that such leakage could bring forth loads of unwanted junk mail, promotions and spam from companies that access user lists. Others see even graver consequences, such as unauthorized credit max-outs or identity theft. The answer to these fears is PCI encryption, which is being adapted at 128-bit rate by the leading providers of mobile payment solutions.

Payment Preferences

To the surprise of some analysts in the tech world, many consumers have voiced disinterest in using smartphones for the purpose of making payments. After all, the act of swiping cards is just as fast and easy as the process of tapping smartphones apps. The answer to this dilemma is for businesses to offer more than just a means for paying via mobile apps; business must also combine all the other features of in-store coupons and redemptions into the mobile payment option. The method has proven wildly popular at Starbucks, which has been among the first major businesses to track huge volumes of sales via mobile units.

Smartphone Popularity

The last remaining hurdle is the percentage of the general public which has still not taken to mobile technology. While roughly half the population is now in possession of smartphones, many other people remain out of the mobile loop – a factor not helped by the prolonged recession. Still, the numbers are increasing, and the best option for businesses at this point is to phase in mobile payment solutions while still maintaining traditional means for accepting cash and checks.

Despite these and other lingering concerns, optimism for the future of mobile payments abounds.

“Mobile payment solutions are set to be the most revolutionary phenomenon to sweep the world of retail since the introduction of credit cards back in the 1950s,” PayAnywhere asserts. “Already, the tech world has pundits placing their bets on a pendulum shift toward wireless payments through smartphones and tablets by the mid-2010s.”