Mobile Payment Barriers

Part
01
of two
Part
01

Mobile Payment Barriers: US Consumers

Findings from the most recent survey by Simon-Kucher & Partners on factors driving U.S. consumers’ mobile payment behaviors and ways to improve them revealed that the prevalence of (cash, credit cards, and debit cards), mobile payment security and data concerns, lack of confidence in using mobile payments, distrust towards app providers, and lack of adequate knowledge around this payment method, are examples of the major barriers to mobile payments for consumers in the U.S. The following section covers these factors in detail and includes statistics based on consumer survey responses.

DOMINANCE OF CASH, CREDIT CARD OR DEBIT CARD

  • According to the survey by Simon-Kucher & Partners, 89% of U.S. consumers still prefer paying with cash, credit card, or debit card. The same survey further indicates that only 7.6% of the respondents prefer using mobile as a method of payment.
  • An October 2018 study published by RootMetrics and IHS Markit showed that over one-third of U.S. smartphone users do not use mobile payment apps because they believe using a credit card or cash is easier (37.4%).
  • Another 36.3% of the respondents in the RootMetrics and IHS Markit study worry that their data is not secure, whereas one in 10 respondents noted that they do not use mobile payment methods since they have experienced connectivity issues in the past.

MOBILE PAYMENTS SECURITY AND DATA

  • Concerns about mobile payment security are among the leading barriers to mobile payment adoption in the U.S.
  • Approximately 40% of survey respondents from the Simon-Kucher & Partners survey showed concerns over fraud and identity theft. Among non-mobile payment users, only 13% think that mobile wallets are secure.
  • Another 36.3% of the respondents from the RootMetrics and IHS Markit study worry that their data is not secure, whereas one in 10 respondents noted that they do not use mobile payment methods since they have experienced connectivity issues in the past.
  • Generally, security concerns plague mobile payments as expressed by over half of consumers of all ages.

LACK OF CONFIDENCE IN USING MOBILE PAYMENT

  • The survey by Simon-Kucher & Partners indicated that about 70% of barriers hindering U.S. mobile payments revolve around the lack of confidence in using mobile payments.
  • Among the top reasons cited by consumers include not being tech-savvy (22.9%), risk of losing phone (17.7%), fear of forgetting passwords (10.7%), fear they might make mistakes (9.1%), and frustration setting up the new payment feature (9.3%).

DISTRUST TOWARDS APP PROVIDERS

  • Respondent’s to YouGov’s survey also cited distrust towards app providers (16%) and unfamiliarity with mobile offerings (17%) as some of their top reasons for not using mobile payments.
  • The study also found out that consumers prefer mobile payment apps offered by their primary bank.
  • 75% of the respondent said that they prefer to use a mobile payment app provided by their primary bank versus one offered by a software company, or another bank.

LACK OF ADEQUATE KNOWLEDGE REGARDING MOBILE PAYMENT

  • According to Statista, besides security and consumer data concerns, there is also a general barrier to mobile payments for U.S. consumers resulting from the lack of adequate knowledge around the payment method.
  • Findings published by Statista indicate that 17% of the respondents do not understand where mobile wallets are accepted, another 17% do not know how to access mobile wallets, 15% do not know what is mobile wallets, 15% do not know how to tap-pay using their phones, and 13% are unaware whether their phones offer that service.

RESEARCH METHODOLOGY

Compilations on information regarding barriers around mobile payments for consumers in the U.S. are freely available in public. There are also several pre-compiled reports with the same data on various payments websites, market research reports, marketing websites, and business and finance websites. All five examples are barriers because U.S. consumers identify them as the core reasons why they are slow to adopt mobile payments. Moreover, these consumers have responded to survey questions that specifically seek to uncover the barriers that hinder them from using mobile payments. Importantly, the examples provided are repeated across the many sources we examined, and are presented as pre-compiled findings.

Unfortunately, there was no data in these reports we explored providing a geographic breakdown, specific to the U.S. geography that shows the particular concerns affecting people of a certain region versus another region. Most of these reports provided a demographic segmentation, specifically around generations, i.e., older (baby boomers) versus younger (millennials and generation Xers). Again, most reports available online on the subject reference the recent survey by Simon-Kucher & Partners, and many do not feature data on geographic segmentation.

Overall, while most studies on the subject are also relatively young, it is possible that the current focus of the study is nationwide to discover barriers affecting all U.S. consumers, versus region-focused studies, which are currently unavailable in public, and not included in the reported examined. In this regard, we concluded that findings in the reports examined are representative of the entire nation, and are not particular to any region.


Part
02
of two
Part
02

Fuel Apps: US Consumers

GasBuddy and PYMNTS.com report that 4.5% of consumers in the United States use mobile fuel apps when purchasing fuel. Given that there are around 131,439,000 consumer units in the country, the number of consumers who use mobile fuel apps when purchasing fuel can be estimated at 5,914,755. Consumers in the Northeast are more inclined to pay for gas with cash compared to consumers in other regions, so it is likely that the percentage of consumers who use mobile fuel apps for purchasing fuel is smaller on the East Coast than on the West Coast.

NUMBER OF CONSUMERS WHO USE FUEL APPS WHEN PURCHASING FUEL

  • GasBuddy, a key resource for competitive gas prices and the company behind the fuel savings program Pay with GasBuddy, and PYMNTS.com, an authority on payments, polled 10,049 consumers in the United States to understand how mobile apps are used for gas purchases.
  • Survey results indicate that 49.4% of consumers in the country use mobile apps for their gas-related needs, but only 4.5% of consumers use mobile apps to pay for gas. Of consumers in the United States who use a mobile app to pay for gas, 68% purchase gas as frequent as once a week and 57% say they would use an app to pay for gas more frequently if the app could also be used for convenience store product purchases.
  • GasBuddy and PYMNTS.com did not explain in detail how it chose its survey respondents or how it defined 'consumers,' but given that the country's Bureau of Labor Statistics reports that there were 131,439,000 consumer units in the United States in 2018, it can be estimated that there are around 5,914,755 consumers in the country who use fuel apps when purchasing fuel. The bureau defines a consumer unit as either a married couple consumer unit, a single parent consumer unit, or a single person consumer unit. On average, each consumer unit consists of 2.5 people, 0.6 children under 18, 0.4 adults 65 and older, and 1.3 earners, and each consumer unit has 1.9 vehicles.
  • Alternatively, YouGov and ACI Worldwide report that 7% of adults in the United States prefer paying with a mobile app at fuel and convenience stores. They also report that 10% of adults have utilized a mobile app to pay at fuel and convenience stores, and that of these adults, 83% express satisfaction with the app, in terms of both speed and convenience.
  • The United States has a population of 327,167,434, and of this population, 253,881,928 or 22.4% are adults. If adults instead of consumer units are considered, then the number of consumers in the country who use mobile apps to pay at fuel and convenience stores would be higher at 10% of 253,881,928 or around 25,388,192.

STATISTICS SPECIFIC TO THE EAST COAST

  • Statistics about mobile fuel payment that are specific to the East Coast are not publicly available, but according to YouGov, a market research firm, and ACI Worldwide, an electronic payment solution provider, preference for cash payment at fuel and convenience stores is highest in the Northeast. As opposed to 18% in the Midwest, 22% in the West, and 21% in the South, 26% of adults in the Northeast prefer paying with cash. These figures suggest that the percentage of consumers paying for gas or fuel through mobile apps may be smaller on the East Coast than on the West Coast.
  • Preference for debit/credit card payment at fuel and convenience stores, on the other hand, is lowest in the Northeast. As opposed to 64% in the Midwest, 56% in the West, and 52% in the South, only 47% of adults in the Northeast prefer paying with a debit/credit card at fuel and convenience stores.
  • As far as fuel purchases are concerned, it appears the Northeast have more loyal consumers than the Midwest, the South, and the West. As opposed to 82.0% in the Midwest, 81.4% in the South, and 76.1% in the West, only 75.9% of Pay with GasBuddy users in the Northeast transact at two or more gas or fuel brands. The Midwest has a larger percentage of drivers who are brand-agnostic.
  • According to GasBuddy, "the more congested coasts see less competition for loyal customers than the open areas of the South and Midwest." Of drivers in the Northeast who purchase fuel at least 4 times a month, 24% buy from the same brand.

RESEARCH STRATEGY

To check if the desired statistics are readily available in the public domain, we first looked for articles or reports that cover the fuel or gas purchasing habits of consumers in the United States. We figured that if a person or company has already determined the number of consumers who use mobile apps when purchasing fuel, this number will most likely be reported in these articles or reports. It turned out, however, that media or press coverage of this topic is limited. Articles and reports published by PYMNTS.com, GasBuddy, and ACI Worldwide were the only relevant sources we found. These sources do not readily provide the desired number, but they offer insights into the percentage of consumers or adults who use mobile apps to pay for fuel. GasBuddy and PYMNTS.com report that 4.5% of consumers in the country use mobile apps to pay for gas, while YouGov and ACI Worldwide report that 10% of adults have utilized a mobile app to pay at fuel and convenience stores.

Since the desired number is not pre-compiled, we attempted to triangulate the answer. The percentage of consumers or adults who use mobile apps to pay for fuel is readily available, and finding the number of consumers or adults in the country would enable us to estimate the number of consumers or adults who use mobile apps to pay for fuel. Surprisingly, finding the number of consumers proved tricky. GasBuddy and PYMNTS.com did not explain its methodology in its report, and it is unclear how they chose their survey respondents or 'consumers'. There was no official or standard definition of a consumer as well. It is unclear if they took a sample from the population of adults, the population of vehicle owners, the population of drivers, or the population of households or consumer units. The closest information we were able to find was the number of consumer units reported by the country's Bureau of Labor Statistics and used in the bureau's Consumer Expenditure Survey. Considering that the bureau itself defines consumers in terms of consumer units (households) instead of individuals, we felt it is safe to assume that GasBuddy and PYMNTS.com did not pick more than one survey respondent from the same household. To compute the number of consumers who use mobile apps to pay for fuel, we multiplied the number of consumer units by 4.5%. For comparison purposes, we also computed the number of adults utilizing mobile apps to pay at fuel and convenience stores by multiplying the number of adults in the country, as reported by the Census Bureau, by 10%.

131,439,000 x 4.5% = 5,914,755
253,881,928 x 10% = 25,388,192

These strategies led us to a few insights about the East Coast, specifically the Northeast region, though the insights are not specific to mobile payment. We tried to research mobile gas or fuel payment apps individually in the hope that this last strategy would uncover additional information, but this strategy proved fruitless. Researching mobile gas payment apps such as ExxonMobil Speedpass+, The Shell App with Mobile Payment, GasBuddy, and BP Gas App did not turn up any new and additional insights about how the East Coast consumer differs from the general market. It appears experts in the field have not yet covered or studied regional differences in mobile gas or fuel payments.
Sources
Sources

From Part 01
Quotes
  • "The U.S. has one of the world’s highest smartphone penetration rates in the world. Yet, consumers are not embracing mobile payments on a significant scale, despite its benefits in terms of higher security, speed and convenience."
  • "“In designing mobile payment features, we have neglected to consider the behavioral-based forces shaping the U.S. consumer’s payment choices and habits,” said Wei Ke, Ph.D., Managing Partner in the global banking division at Simon-Kucher & Partners. “If we want consumers to enthusiastically embrace mobile payments we first have to invest the resources to uncover the psychological barriers hindering adoption. "
Quotes
  • "Additionally, GfK surveyed US internet users last August on their feelings about mobile payments. Around half of millennial and Gen Z respondents said they preferred to pay with their mobile device. They also said they feel the method is easier and faster."
  • "But Gen Xers and boomers (ages 39 and older, per the survey) found little use for mobile payments, with just 28% and 11% noting it as their preferred payment method. "
  • "Across the board, security concerns plagued mobile payments—more than half of consumers of all ages said they were worried about the security of their personal information when using mobile payments."
Quotes
  • "Fear of the unknown and concerns over security pose more obstacles. The report, for example, shows that the majority of U.S. consumers (56%) feel using mobile payments makes them vulnerable to fraud and theft. Only 5% think mobile payments reduce the chance of fraud and theft, while 13% say it makes no difference."
  • "A majority of U.S. consumers (56%) feel that mobile payments increase the chance of fraud and theft, according to a study by YouGov released today. As a result, those customers prefer to use debit or credit cards (49%) or even cash and checks (36.1%), the study suggested."
Quotes
  • "Security and data concerns are common issues raised by consumers reluctant to adopt mobile payments in many markets and this is certainly true for the US. According to the same 2018 research from Simon-Kucher & Partners, 40% of US consumers who don’t use mobile payments cite security concerns as a major reason."
  • "The US Mobile Payments Market Is 35 Times Smaller Than World Leader China (2017) China’s mobile payments market was worth $17 trillion in 2017 according to figures from iResearch quoted in the FT, roughly 35 times more than America’s $49 billion market."
Quotes
  • "As of May 2019, 65 percent of smartphone owners in the United States were still reluctant to try out mobile wallets due to security reasons. Not knowing where mobile wallets were accepted was another common barrier to adoption."