Security Concerns Top Barrier to Adoption of Smartphone Payments

March 12, 2012

radiusglobal-securityconcerns-smartphonepayments-march2012.jpg57% of smartphone owners anticipate a similar or decreased usage of their device as a payment method, citing concern about security or fraud (39%) as the leading reason for not increasing their use, according to a February 2012 report from Radius Global. Overall, 86% of Americans say that data security concerns have either a significant influence (49%) or some influence (37%) on their likelihood to make purchases through a smartphone.

According to an Oracle survey released in December 2011, one-quarter of smartphone owners worry that someone will steal their payment information if they use their mobile phone to pay in stores.

Concerns High Among Advocates

Interestingly, data security concerns are higher among groups that are more likely to advocate mobile purchase solutions. For example, while 18-24-year-olds are the most likely (33%) of any age group to have used a smartphone to conduct a transaction over the past 6 months, they are 10% more likely than the average American to say that data concerns are a strong influence on their likelihood to make purchases through a smartphone (54% vs. 49%). Similarly, among 25-34-year-olds, although 30% have made a purchase in the past 6 months using their device, 53% say data security concerns are a significant concern.

In fact, consumers who consider themselves digitally savvy are 26.5% more likely than the average to say that security concerns significantly impact their likelihood to use smartphone payment solutions (62% vs. 49%).

Convenience Top Factor for Increasing Usage

Meanwhile, among those anticipating increased usage of smartphones for payments, the leading reason for doing so is that it allows them to shop when they want (61%). Other top reasons include that it is easier than carrying a purse or wallet, and that they can avoid visiting a store (both at 45%), while roughly 4 in 10 say that it is faster than other payment methods and more cost effective than some other methods.

Scan and Go Functionality Appeals to Youth

The appeal of purchasing goods by scanning a product barcode using a smartphone is especially high among younger consumers. Two-thirds of 18-24-year-olds and 25-34-year-olds say this is either extremely appealing or somewhat appealing to them, compared to the overall average of 45%.

These groups are also the most likely to use discounts or special offers from their favorite retailers on a smartphone. 74% of the 18-24 set and 70% of the 25-34 group say they are extremely or somewhat likely to redeem special offers via a smartphone, compared to the overall average of 48%.

This trend is supported by Harris Interactive survey results released in March 2012, which found a consistent trend towards a greater acceptance of mobile scanning capabilities among younger adults. Echo boomers (aged 18-35) were 23% more likely than the average to be comfortable using a mobile app to make purchases as they would a gift card (48% vs. 39%), and 33% more likely to be open to using a mobile app to make purchases like they would a credit card (32% vs. 24%).

Other Findings:

  • Data from Radius Global’s “Appeal of Mobile Payment Solutions” indicates that 36% of smartphone owners say they would not carry cash, debit cards, and credit cards if they knew they could pay for everything using their device. This is matched by the proportion who say they never foresee alternative payment methods replacing payment by cash, debit cards, or credit cards.
  • The purchases most commonly made by smartphone owners are applications (61%), music (45%), movie theater/event tickets (45%) and clothing (42%).
  • Half of smartphone owners use their primary bank’s mobile application, with 90% of those saying they are least somewhat satisfied with it.

About the Data: The Radius Global data is based on a survey of 1,005 male and female respondents who are 18 years or older and are purchase decision-makers for household goods and services. Interviews were conducted from January 31 – February 2, 2012.

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