On Wednesday (Dec. 9), Deloitte released a major mobile report and concluded that mobile payments is suffering from a payments industry self-inflicted wound: an almost criminal lack of shopper and store associate education about mobile payments.
This is one of those good news/bad news situations. The good news is if the payments industry leaders act smart, this problem can not only be solved, but reversed. Consumer and store employee education will sharply boost mobile payments usage—and that will on top of a continual influx of new mobile shoppers as more people upgrade to NFC-friendly smartphones. The bad news is—when was the last time you saw a lot of payments industry leaders acting smart?
The shopper and associate education part of the report is within its exploration of who is and is not using mobile payments. The survey had 49,500 respondents across 31 countries (and six continents). Of those surveyed, 18 percent said they have done mobile payments, meaning that 82 percent had not.
Before we delve into that 82 percent who had not, let’s look at those who did. That 18 percent includes 5 percent of the total audience who said that they “only ever used it once or twice.” That’s your shopper who buys an NFC phone, tries it once for the experience and presumably didn’t enjoy it because he/she never tries again. Another 5 percent (of all participants) said they use mobile payments weekly and another 5 percent said that they use it “less often than once a week.” The smallest percent—albeit still a respectable 3 percent of all participants—said they use mobile payments daily. (Wonder if that drops to two percent if we eliminate all Apple and Google employees?)
Deloitte stressed that the 18 percent of participants who said they used it in 2015 is “nearly 4x” growth from last year’s 5 percent. That’s not quite fair. Mobile payments were quite dead until Apple Pay rolled out at in October 2014, a move that pushed payments to Apple devices as well as Android devices (which benefitted significantly from the Apple Pay-fueled hype). In short, saying that mobile payments in 2015 is a lot higher than in 2014 is hardly a celebration-worthy claim.
Now onto the more interesting figures: the 82 percent of participants who said that they have never used mobile payments. The first question that needs to be addressed—and Deloitte Vice Chairman Craig Wigginton in a phone interview said that he didn’t have an answer—is how many of those 82 percent were even able to do mobile purchases. Do they own a mobile-payment-capable-device? Are they in an area where mobile payment accepting merchants exist?
Some of the answers participants gave were unclear on those points, partially due to how the questions were phrased. One question, for example, offered users the ability to choose “I do not have the necessary feature/app on my phone,” an option chosen by 22 percent of those who said they have never made a mobile purchase. Does that mean they have the wrong hardware? Does it mean they have the right hardware but wrongly think they have to download an app to use Apple Pay or Google Pay?
A lot of this comes back to shopper education—which is Deloitte’s key point. Almost every answer of the “no, I’ve never used mobile payments” group could be changed with associate and shopper education, Wigginton said. The most popular reason—accounting for a stunning 50 percent of all of the answers from the “I have never used mobile payments” group—was “I do not think they are secure enough.”
If we set aside the literal interpretation of this (for many cryptographers, nothing about payments is ever secure enough nor is it likely to ever be secure enough) and assume that people interpreted it to simply mean “Are you worried that you are more at risk paying with mobile than with a magstripe or EMV plastic card?” then we have an education problem. Say what you will about Apple Pay, but between its secure element and its tokenization, it’s hard to argue that it doesn’t deliver better security data protection than magstripe. (Note that “better security” is far removed from “sufficiently good security.”)
Other answers were: “I do not see any benefits” (36 percent); “I do not know any stores that allow this” (11 percent); “I do not really understand all the different options” (10 percent); “It is too complicated to use/setup” (9 percent); “the screen is too small” (8 percent); “I do not need to make any payments” (8 percent); “I was not aware that you can do this” (4 percent); and “I don’t know” (1 percent).
Oh and an interesting side note. One answer got zero percent of the respondents and that was “This is not available in my country.” At least that is a good sign.
Every one of those negative actions might be flipped with education. Associate education alone would address “It is too complicated to use/setup.” And “the screen is too small” is also training, as mobile payments require a truly tiny portion of the screen. If someone thinks they need more screen space, they are doing something wrong.
When you realize that half of those respondents would be flipped by simply explaining to them the security realities—not to mention pointing out that zero liability will protect them in either case—and it’s easy to see how these numbers could be flipped with a minimal amount of training.
By the way, that associate training is essential. In watching consumers try to use mobile payments for the first time, the biggest factor in whether they succeed or not is how the associate responds. Are they knowledgeable? Helpful? Patient? Or do they—as I have repeatedly witnessed—roll their eyes as if to say “Oh, no. Another idiot trying mobile payments. Please make it stop.” The shopper quickly gets the hint to give up and go home.