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Consumer Attitudes towards Mobile Payments - UK - August 2016

Published By :

Mintel

Published Date : Aug 2016

Category :

Banking

No. of Pages : N/A

Despite the huge interest in mobile payments across the financial services industry, Mintel’s research suggests that actual usage is low. Companies have two main challenges to overcome to achieve growth: they have to convince consumers that paying with a smartphone is a secure transaction method; and they need to give people a compelling reason to switch from using cards. Consumers are most likely to use mobile payments if they are rewarded for doing so through schemes such as Android Pay Day.

Table of Content

Overview

What you need to know
Products covered in this Report
Peer-to-peer mobile payment services
Point-of-sale mobile payment services

Executive Summary

The market
Contactless cards have enjoyed huge recent growth…
Figure 1: Monthly contactless spend and average spend per card, 2014-16
…paving the way for mobile payments
PSD2 opens new opportunities for innovation
Companies and brands
A third of PayPal payments to be made on mobiles by the end of 2016
Android Pay joins the competition
The consumer
NFC-enabled tech devices are mainstream
Figure 2: Smartphone ownership, by operating system, April 2016
Use of contactless continues to grow
Figure 3: Use of payment methods, April 2016
Paypal becomes an incumbent, while Apple Pay shows signs of growth
Figure 4: Awareness and use of selected mobile payment schemes, April 2016
A third of smartphone users have made a mobile payment
Figure 5: Types of payments made through a smartphone in the last year, April 2016
Incentives are the key to changing payment habits
Figure 6: Attitudes towards mobile payments, April 2016
Data security is the biggest concern about mobile payments
Figure 7: Concerns over mobile payments, April 2016
What we think

Issues and Insights

Security concerns are consumers’ biggest turn-off
The facts
The implications
Incentives are the key
The facts
The implications
A cardless, not cashless society
The facts
The implications

The Market – What You Need to Know

Contactless cards have enjoyed huge recent growth…
…paving the way for mobile payments
PSD2 opens new opportunities for innovation

Market Context

Contactless payments
Contactless hits the mainstream…
Figure 8: Monthly contactless spend and average spend per card, 2014-16
…but it took almost a decade to do so
What does the growth of contactless mean for mobile payments?
Mobile payment schemes
The fragmented marketplace adds to consumer uncertainty

Regulatory and Legislative Changes

PSD2 increases the scope for innovations in payments and money management

Companies and Brands – What You Need to Know

A third of PayPal payments to be made on mobiles by the end of the year
Android Pay joins the competition
Innovations look to a cardless future

Peer-to-Peer Mobile Payment Services

PayPal
Profile
Recent activity
Paym
Profile
Recent activity
Pingit
Profile
Recent activity

Point-of-Sale Mobile Payment Services

Apple Pay
Profile
Recent activity
Android Pay
Profile
Recent activity
Barclays
Profile
Recent activity
Starbucks
Profile
Recent activity

Innovation in Mobile Payment Services

Cash in a cardless society
Android Pay Day offers rewards to incentivise use of Android Pay
Barclaycard introduces instant card replacement
Samsung Pay is on its way

The Consumer – What You Need to Know

NFC-enabled tech devices are mainstream
Use of contactless continues to grow
Paypal becomes an incumbent, while Apple Pay shows signs of growth
A third of smartphone users have made a mobile payment
Incentives are the key to changing payment habits
Most people are uncomfortable with the cashless society
Data security is the biggest concern about mobile payments

Mobile Device Ownership

It’s consumer apathy, not technology, that’s holding the market back
Figure 9: Mobile device ownership, April 2016
Waiting for Android Pay to hit the high street
Figure 10: Smartphone ownership, by operating system, April 2016

How do People Pay?

Uptake of contactless payments shows how slowly habits change
Figure 11: Use of payment methods, April 2016
Are contactless credit cards gaining more traction?
Figure 12: Use of payment cards, April 2016
Cheques are still hanging in there
Figure 13: Use of non-card payment methods, April 2016

Awareness of Mobile Payment Schemes

PayPal: No longer a challenger brand?
Figure 14: Awareness and use of selected mobile payment schemes, April 2016
Apple Pay: Signs of progress, especially among Apple Watch owners
A fragmented market, with sizeable gaps in consumer awareness
Age profile points towards PayPal’s incumbent status
Higher levels of engagement among the more affluent…
…and contactless card users
Figure 15: Use of selected mobile payment schemes, by use of contactless cards in the last three months, April 2016

Type of Payments Made Through a Smartphone

A third of smartphone users have made a payment using their phone
Figure 16: Types of payments made through a smartphone in the last year, April 2016
17% of people have used their mobile to pay in a shop or restaurant
Payment is only of secondary interest when it comes to dedicated apps
Figure 17: Interest in smartphone services for restaurant apps, March 2015
It’ll take incentives to rapidly shift consumer behaviour
Peer-to-peer split between PayPal and bank apps
Smartwatch owners have made the switch to mobile payments
Figure 18: Types of payments made through a smartphone in the last year, by devices owned, April 2016

Attitudes towards Mobile Payments – Pull Factors

Convenience isn’t enough to change payment habits
Figure 19: Attitudes towards mobile payments, April 2016
Offer incentives, not convenience
More than a payments app

Attitudes towards Mobile Payments – Security

Most people are uncomfortable with the cashless society
Figure 20: Attitudes towards mobile payments, April 2016
Around a third of under-35s would pay through social media
Figure 21: Comfort using a social media or messaging app to pay friends and family or retailers, by age, April 2016
Proving security is a hurdle that mobile payment providers must get over

Concerns Over Mobile Payments

Data security is the biggest worry…
Figure 22: Concerns over mobile payments, April 2016
…and is shared regardless of contactless experience
Figure 23: Concern over security issues surrounding mobile payments, by contactless card use, April 2016
Usability is a smaller worry, but could still hold back growth

Appendix – Data Sources, Abbreviations and Supporting Information

Abbreviations
Consumer research methodology

List of Table

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