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Mobile wallet: The end of cash?

Research by YouGov shows almost a quarter of people are interested in using their mobile phone instead of cash to pay for purchases.

The idea of keeping credit cards, coupons, loyalty cards and gift vouchers all nestled in the safety of your mobile phone is not just a space-saving dream; it's a marketer's Christmas.

Near-field communication (NFC) technology is promising to revolutionise the mobile-commerce sector, allowing customers to swipe their smartphones and scrap the cash. Mobile wallet: The end of cash?

The whole world in your hands

Mobile payment systems are being pushed out like summer daisies. Google Wallet, Isis and PayPal mobile payments have all already launched and many more are set to follow as marketers begin to realise the affect this payment transformation will have on mobile marketing.

The innovative technology not only engages consumers, but creates a communicative interaction between the buyer and the brand. The mobile wallet will give marketers the opportunity to interact with consumers at the moment of the transaction, by exposing the consumer to the brand's mobile application or an instant coupon. It will also give retailers and marketers the data needed to answer imperative questions about consumers: Who are they? What is their purchasing behaviour? How often are they shopping? How much do they typically spend? With this type of information at their disposal, retailers can team up with mobile marketers to create targeted, relevant offers and discounts at the point-of-sale

Wave goodbye to your pennies

Research organisation YouGov says it expects a rapid take up of so-called "wave and pay" technology. This prediction is based on the findings that of more than 2,000 surveyed, 10 per cent say they are likely to use the service in the future. And while 5 per cent agree that they will get the technology as soon as it's available, the vast majority -- almost a half (48 per cent) -- won't be rushing to swap their real wallet for their mobile wallet. These respondents agreed it's a good idea but they will only consider mobile payments when any issues have been ironed out.

When it comes to awareness levels, more than a third of respondents admitted they didn't know if their existing phone was enabled to make cashless payments, while 2 per cent of respondents said they already have NFC technology in their phone. Russell Feldman, the YouGov Consultant who led the research, explained that consumers are attracted by the idea of paying for items via their mobile phone but need more information. "Retailers, mobile operators and handset manufacturers have a real opportunity to educate consumers about the advantages of paying -- particularly for smaller items -- in this way. We believe once people have seen it in practice they will be quick to adopt it," he said.

The top perceived benefits for those planning to use NFC in the future are: convenience to pay (87 per cent); the speed of paying (67 per cent); easier than carrying cash and cards (67 per cent); better for the environment (37 per cent); less chance of losing personal information than with paper receipts (35 per cent); being able to keep track of spending more easily (29 per cent). (See table below.)

Of those respondents that said they would be likely to adopt the cash-free payment technology for their mobile, they can see themselves buying everything from small purchases like sandwiches, magazines and newspapers (81 per cent), to more expensive items such as CDs, DVDs and games (65 per cent). More than a third (39 per cent) could see themselves making bigger investments including games consoles, clothes and even the weekly shop.

Wonga worries

However, Daniel Flamberg, managing partner at lead generation agency Booster Rocket argues that despite of the incredible utility of mobile payments, the lack of technical standards, limits on smart phone penetration, competing technical and processing systems and tentative uptake by consumers and retailers will stunt the growth of this channel. "Mobile payments will not take off with a hockey stick curve like Google+ did," says Flamberg. "Instead we will witness a fog of uncertainty and doubt as the competing interests fight it out, make confusing claims and build daisy chains of retailers and allies." But he does conceed that: "When the battle is settled and a single standard approaches, mobile payments will generally replace credit cards, wallets and checking/debit accounts."

There are further concerns about mobile payment technology that could hold back mass-consumer adoption. The main reason for respondents not planning to use mobile payment in the future is that they are happy with the way they pay now (67 per cent). There are also concerns about security and fraud (56 per cent), some respondents say they either don't need a mobile payment system or aren't interested (both at 45 per cent). Just under 45 per cent are concerned about viruses or malware that could steal details from their phones.

But Feldman concludes: "There will always be consumer concerns about adopting any new technology, from data security to theft, changing mobile providers to correcting mistaken payments. Consumers need to see that these genuine worries have been addressed before they wholeheartedly embrace mobile payments. Our research suggests that consumers see using NFC technology as inevitable, and they are expecting supermarkets, mobile phone and consumer electronics retailers to be the first retailers to offer contactless payments."

Catherine Thurtle is the editor of iMedia Connection UK.


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