Consumers who use mobile payments systems like the convenience and speed the systems offer, but they are concerned about security and loss of privacy, according to a paper published by the Pew Charitable Trusts. “Is This the Future of Banking?” also says that information from focus groups in four U.S. cities offers ways to use mobile payments systems to enable the almost 10 million adults who are “unbanked” to better manage their finances. Nearly one-third of those individuals have smartphones, Pew notes.
The paper distinguishes between mobile banking—carrying out a transaction using a bank’s website or smartphone app—and mobile payments—paying for a transaction using a smartphone and a payment system such as Apple Pay, Google Wallet, or Starbucks’s proprietary system. Privacy and security concerns are greater for mobile payments than for mobile banking. Many focus group members also said they saw no personal benefit from using mobile payments.
Consumer concerns. Consumers generally thought that mobile banking was safe. However, they were concerned about the reliability of mobile remote deposit capture functions. They worried that deposits might not be properly credited or that their account information would be exposed.
Consumers were less sure about the security of mobile payments, citing the perceived inherent insecurity of using a device to gain access to the Internet, especially if public Wi-Fi is being used. They also assumed that various companies were collecting location or other information about them. Some consumers accepted this loss of privacy as the trade-off for using the payment system, while others were uncomfortable about sharing personal information. Most, according to the paper, “expressed a sense of resignation regarding information sharing.”
However, these concerns could be barriers to more wide-spread use of mobile payments, the paper says.
Potential benefits. Some focus group members said they would be more likely to use mobile payments if they received a tangible benefit, such as cash back or reward points. The Starbucks app was cited as an example of offering benefits.
Focus group members who did not have bank accounts did see that mobile payments could be convenient because they always have their smartphones handy. There would be more convenience if they could make deposits to linked accounts using their smartphones. Mobile payments systems could offer these consumers “an easily accessible and affordable transaction account,” the paper says.
Companies: Apple Pay; Google Wallet; The Pew Charitable Trusts; Starbucks
MainStory: TopStory BankingOperations ChecksElectronicTransfers IdentityTheft
Interested in submitting an article?
Submit your information to us today!Learn More
Banking and Finance Law Daily: Breaking legal news at your fingertips
Sign up today for your free trial to this daily reporting service created by attorneys, for attorneys. Stay up to date on banking and finance legal matters with same-day coverage of breaking news, court decisions, legislation, and regulatory activity with easy access through email or mobile app.