The world is dominated by mobile phones. Literally – half of the world's population has one, and with payments via mobile being much faster than getting out your card or cheque book (who remembers those?), mobile would seem like the obvious choice for making a payment.
Right? Wrong, according to “The Future of Money”, a recent study conducted by Oxford Economics and Charney Research. The test involved a survey of 2,000 consumers and 300 executives from 10 countries across the globe about their payment habits, and the results were staggering. While over half the world’s population owns a mobile, they found only 8% were using them for payment services.
In fact, over 35% of all consumers worldwide are still regularly using cold hard cash as their preferred payment type, which has been widely accepted as the least secure form of payment on the market. As it turns out, people are uneasy about using their little square companions for monetary purposes, and attitudes will have to evolve for mobile payments to start growing.
Here’s a list of the 6 key things we learned from the report:
1. Mobile is preferred by growing businesses and growing economies
Forward-thinking companies and growing economies are beginning to latch on to the pace of the future and embrace mobile payments. The more financially stable a business is, the more likely it is to adopt mobile payment services.
The assessment betrayed that businesses with an annual growth of over 11% in revenue were 10% more likely to have mobile wallet functionalities than those with a smaller or negative annual growth. There was also a marked increase in partnerships with payment service providers with the faster-growing companies.
Not only that, but the world’s fastest-growing economies (Kenya and China being the most obvious) too are adapting to mobile a lot faster, having leap-frogged the credit card generation, and moved straight to mobile.
Mobile wallets can facilitate payments where bank accounts may not exist.
For example, a farmer in Korea can now pay for animal feed with his phone. This in turn provokes economic stimulation where there was none previously.
The report echoed this: the five fastest-growing nations in the survey were shown to be twice as likely to use mobile wallets for their spending habits than in developed nations. Over 58% use mobile pay methods, compared to 39% in developed countries.
2. Mobile payments help globalise businesses
Mobile is not only stimulating developing economies, but also the global economy. Mobile payments have been shown to make cross-border trade easier and faster, which in turn promotes a business' growth. The report reflected this, showing that the faster-growing companies, who were more likely to use mobile, were 12% more likely to sell to international markets.
Additionally, companies with a specific focus on international trade were shown to earn more than half of their revenue through e-payment methods, including mobile.
3. Mobile payments = Mo(bile) sales
While credit cards make up most of the world transactions, businesses across the board (72% of those surveyed) believe payment technology has the potential to increase their returns. Many understand that the payment is the component which customers tend to enjoy the least, intimating that speed and cost efficiency were two main factors driving this opinion. More than 66% believe it would be a competitive disadvantage not to opt for a mobile option.
One of world’s largest brands, Walmart, has shown how turning to mobile can aid a business to compete on a global scale. Walmart Pay was initiated in order to keep up the competition in e-commerce with big players such as Amazon, and it now boasts over 22 million active users.
Clearly, mobile payments have the potential to be monumental for businesses. The global market research firm TrendForce predicted that mobile payment volume will grow significantly in the next couple of years, from $620 billion in 2016 to $1.08 trillion in 2019.
4. Young people are going mobile
Unsurprisingly, it’s the millennials who have taken to mobile the quickest. 9.2% of 18-34 year olds surveyed used mobile payments, compared with only 6.8% of over-50s.
The younger generation also have higher predictions for mobile, with 47% believing its usage will increase greatly in the foreseeable future. Recent reports are showing that millennials actually put more trust in tech companies than banks for their financial transactions. Banks are beginning to understand the burgeoning market for it; some have created their own web and mobile apps to compete for younger consumers.
More young people are willing to use mobile payments
5. Many people underestimate the security of mobile payments
Mobiles have the power to be the most secure form of payment ever created. Our phones contain a camera, a voice recorder and a location tracking device: no other machine, payments or otherwise, has this many forms of identity recognition. Technology whizzes have stated that mobile’s functionalities of encryption, tokenization and authentication make mobile wallets far safer than the wallets in your pocket.
Yet the popular viewpoint remains that using mobiles for payments just isn’t safe, and in the report, security proved to be the biggest barrier for respondents to their use of mobile payments.
More than 50% of the total respondents of the survey iterated this idea, compared with just 13% who would put their faith into mobile. Clearly, there is a discrepancy between hard facts and popular belief.
A lack of awareness surrounding payments has a large part to play in the distrust of mobile wallets.
In regions where mobile payment is uncommon, there is the most distrust, while in areas where it has become more widespread, the trust in mobile security has been proven to be vastly increased.
Nearly two-thirds of consumers from Kenya, where mobile payment is more commonplace, trust mobile to be the safest form of payment. Comparatively, less than 4% of consumers in countries such as Japan, the UK and Germany, where the payment form is hardly used, have faith in their devices.
The survey also showed that those who have received less education in general harboured a bigger distrust in using their phones to spend. It found that a higher proportion (two-thirds) of consumers with little to no education would not trust paying with their mobiles than those who had completed further levels of education.
6. There is a disparity between business and consumer
Consumers appear to have a deeper distrust of mobile security than business owners, and this in turn means businesses are not stepping up to consumer needs.
70% of consumers surveyed were concerned that hackers could steal their personal details, while 60% were worried about their money being robbed.
The survey demonstrated that consumers would use mobile payments more if proper security measures were guaranteed. Over two-thirds agreed that face or iris recognition would increase their usage of mobile, while over one-half for voice recognition.
Comparatively, just 59% of the surveyed business executives were worried about personal ID hacking, and 58% about money being stolen. Subsequently, companies are not taking enough measures to guarantee complete security: less than a third are using security biometrics like face, voice or iris recognition, opting for less secure numerical passwords or finger scans instead.
Only 44% of businesses surveyed offer guarantees against monetary fraud, even though it is proven that 75% of consumers would use mobile payments if they did. The report did, however, note that faster-growing businesses were implicating a larger number of security measures.
Consumers are more likely to use mobile payments with iris recognition technology
So, is the future mobile?
While a handful of countries are fully-immersed in the world of mobile payments, many fall miles behind, and attitudes will have to change drastically before the world waves bye bye to physical money.
But consumers and businesses alike are starting to make the move to mobile. It’s been proven to boost economies, drastically increase sales, and it’s caught the attention of the younger generations – provided there are security guarantees to back it up.
Business leaders need to gain a better understanding of the benefits mobile can bring, invest in new technologies, spread the message to merchants and consumers alike, and step up their security measures to meet consumer demands.
The technology for faster, more secure payments is just around the corner; the key is to embrace it before the rest of the world does.