Don’t bank on mobile payments

For all those U.S. operators hoping that mobile payments and mobile banking will become lucrative revenue streams with an associated stickiness factor in the coming years, they may have to think again.

If a report published recently by Lightspeed is indicative of the mood of the American public, the vast majority really ‘don’t give a damn!’ Not satisfied with just surveying 10,000 ordinary people, Lightspeed targeted existing bank customers and found that only about one-third were actually using smartphones, the rest content with basic and feature phones. Even those with smartphones still thought text messaging was the most important function!

Of those smartphone users, only 8 percent thought mobile banking was very important and another 13 percent thought it was somewhat important. When asked about mobile payments less than 5 percent thought it very important, and 11 percent somewhat important.

This may not bode well for the recently launched Google Wallet and the new ISIS initiative that are being heavily invested in. Perhaps it’s simply that U.S. consumers haven’t been exposed to the benefits of mobile banking and payments. Maybe the splintered nature of the payments industry, and its overlapping efforts to develop mobile payments, are also a barrier to consumer adoption.

One commentator reckoned that the banks, credit card networks, telecom providers and technology companies are all trying to stake a claim in the developing U.S. mobile payments industry without yet knowing what the ultimate consumer interest in it will be.

What is more likely an issue is that U.S. consumers are familiar with the current payment and banking systems and may not have been exposed to the obvious benefits of payment by NFC-enabled handsets. Even if they were, they probably wouldn’t believe that all their credit, debit, transport and loyalty cards could be stored on that device. When you consider how many cards an average American consumer has, this becomes a major issue, as well as one of who to trust with all that information.

Lightspeed Research is not exactly the industry’s bearer of good news, because according to another of its surveys, despite the popularity of location-based services among smartphone users, location-based advertising and promotions are surprisingly slow to catch on.

Most U.S. users of location-based apps are motivated to do so by social concerns: 29 percent said they use them to pass time, 22 percent want to publicize their locations to friends or want to locate their friends (10 percent).

Only nine percent of the respondents used location-based services to get coupons or special offers. Only two percent used them to win prizes or enter raffles, while the novelty of game-like activities such as collecting points/badges, and becoming “Mayor” seems to be wearing off. How surprising?

A further indication that location-based promotions might still have a long way to go is the fact that the majority of respondents (56 percent) haven’t responded to any location-based promotions in the past six months.

Even though adoption is low at the moment, opportunity exists for businesses to attract customers via location-based apps. Eighty-five percent of location-based apps users said they would be likely to visit a store or restaurant if they received a coupon or free item for checking in nearby. This idea had appeal across all age groups.

Lightspeed’s Chris Urinyi, commented: “When it comes to location-based promotions, the majority of our respondents show interest in patronizing a nearby business if given a coupon or a freebie, yet less than half report they’ve actually responded to a promotion in the last six months.”

That figures, give them something free and they will come. Only problem is that for mobile operators and their partners this doesn’t make money. Perhaps we should all take a deep breath and do similar market research before spending big bucks on new services that look great on paper and in the marketing storyboards. It also highlights that what may be wildly successful in one market, e.g. mobile banking in Kenya, may not garner the same excitement in the U.S., and vice versa.