Is credit aversion a bump or a barrier toward mobile payment acceptance?
Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
In a poll of 2,503 college students in early April by Balance Innovations, only 16 percent reported they would use mobile payments all the time if such payment methods were widely available.
Forty-two percent would use it somewhat more, depending on the retailer or purchase, and fully 28 percent would not make more mobile payments at all. Those results certainly don’t bode well for the mobile payment industry. "Somewhat" is not a ringing endorsement.
Separately, an RSR survey conducted during the holiday season asked a similar question: "In five years, how do you think you will pay for items when you shop?" Invited to check all types of payment that apply, only 22.1 percent of 190 U.S. respondents between the ages of 18-29 selected mobile payments as one of their choices. That was actually slightly less than the overall U.S. average (1,252 respondents) of 23.7 percent.
RSR partner Brian Kilcourse is fond of saying that to be adopted, a technology has to be easier to use than it is to ignore. Do mobile payment technologies meet that criterion?
In the case of Square, which enables stores to accept credit or debit-card payments through smartphones or tablets, the answer is obvious — it is way easier to use it than to ignore it, no matter how old you are. For a shopper like me, the opportunity to avoid carrying lots of cash is great. I enjoy supporting local businesses, but I rarely carry much cash. Square gives me the ability to buy on impulse wherever I might be.
Starbucks has had success with its mobile payment app which is tied to its loyalty program. Consumers like it. But as FierceRetail’s Executive Editor Laura Heller insightfully pointed out, it’s a pre-paid program and, basically, cash. She believes the hurdle around mobile payment acceptance is less about mobile versus credit/debit but rather between cash and credit, particularly with Millenials expected to drive adoption.
"[Millenials] are carrying a ton of student debt (and pissed off about it), came of age during the recession and consider credit cards bad," wrote Ms. Heller in response to a column on the subject I penned for Forbes. "They think that debit is cash. A card is swiped and then prompts cash to be deducted from a bank account like an ATM withdrawal, but the card part doesn’t register. Try to tell them it’s not the same as using paper money (as I did following the Target security breach) and you’ll get blank stares."
- Mobile Payment Update: Still Not a Happening Thing in the US – RSR Research
- Survey: College Students Wary of Mobile Payment Technology – Balance Innovations
- Millennials Won’t Be The Saving Grace For In-store Mobile Payments – Forbes
Is credit aversion, particularly with Millennials, a significant barrier toward greater acceptance of mobile payments? Do you see it as more of a long- or short-term challenge?