|EMERGING PAYMENT TECHNOLOGY: Survey finds U.S. mobile-payment use doubles|
Mobile payments have more than doubled in popularity, reaching over 33% of respondents to IDC Financial Insights’ latest U.S. consumer-payments survey.
Focused on emerging payment-technology usage, the May 2012 survey found strong growth in prepaid cards and mobile payments. This should lend urgency to bank efforts to develop products in these areas, says IDC. With demand clear, banks need to make sure that nonbanks—which are concentrating on these growth opportunities—don’t dominate the market.
In addition, IDC says that reward programs should be expanded, as banks already sit between most commercial transactions, and thus have the best data of any competitor. Banks also have a long history of offering rewards on their cards, and of working with retailers on cross-promotions. With limits on debit-card interchange creating a revenue gap, targeted offers can provide a replacement revenue source, and anchor ventures in the prepaid and mobile payments markets, according to IDC.
“Based on our results, we expect to see continued growth in open-loop prepaid cards and mobile payments next year, and believe that the improvements being offered in electronic-bill delivery will break electronic-bill presentment and payment out of its doldrums as well,” says Aaron McPherson, practice director of IDC. “The advent of new card-linked offer programs should increase the influence of rewards on the average consumer. However, this will depend on how many banks choose to move ahead aggressively with these programs, and how many merchants choose to support them.”
Of the survey respondents that made mobile payments, more than half used PayPal Mobile (56%), with Amazon Payments and Apple’s iTunes service statistically tied at about 40%. Additionally, prepaid cards showed strong growth, particularly in the network-branded and benefit submarkets.
Among the survey’s other findings:
• Network-branded (open-loop) prepaid cards have drawn neck-and-neck with closed-loop cards in consumer penetration. Strength was seen in all categories, including benefit and payroll cards. This could reflect economic and regulatory factors, as well as better marketing by banks and independent issuers, notes IDC.
• For the second year in a row, both biller- and bank-operated online bill-pay sites were used by more than half of respondents. According to IDC, 73.5% of U.S. consumers now use online bill payment, confirming that it is now the dominant way bills are paid in the United States.
• Despite the popularity of digital downloads, such as apps and music, more respondents reported buying physical goods with their phones than online services, digital goods, or virtual currency.
While IDC’s previous survey, in 2011, noted that the severe recession and financial crisis depressed adoption of several payment technologies by both financial institutions and consumers, its 2012 survey results were more in line with historic trends. Mobile payments, in particular, have become more common. Because of this, IDC increased the number of mobile-payment questions this year to garner more insight into how consumers are using these payments.
[This article was posted on July 17, 2012, on the website of ABA Banking Journal, www.ababj.com.]
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