Poll: Public lukewarm about paying by cellphone
By Tony Mecia
U.S. consumers are no more interested in paying for purchases using mobile phones than they were six months ago, when Apple unveiled its high-profile pay-by-iPhone technology known as Apple Pay, according to a new poll from CreditCards.com.
The poll suggests that even though the number of mobile payments is growing dramatically, with Apple Pay becoming a dominant method, skeptics of paying by phone remain unmoved.
In the telephone poll of 1,000 U.S. adults, conducted March 5-8, 2015, 17 percent of respondents said they would pay for items using a cellphone "always" or "most of the time" if they could. When the same question was asked in September 2014, 13 percent of those answering responded similarly. Those answering "never" or "hardly ever" accounted for 64 percent this time, compared with 62 percent in the fall. This poll's margin of error is 3.6 percentage points.
The indifference to mobile payments comes even as Apple, Google and other technology companies continue to push the technology. At an event Monday, Apple CEO Tim Cook said Apple Pay is available at 700,000 locations nationwide, and he detailed plans for the Apple Watch, debuting in April, which will allow wearers to charge items by waving the watch near a payment terminal at a participating retailer.
As with the iPhone 6 and 6 Plus, customers paying by watch must link an existing credit card. The Apple Watch starts at $349 and goes up to $1,099 for a larger watch with a heavier band. A version made of 18-karat gold goes for $10,000.
Driven by 'power users'
Apple has quickly established itself as a major player in mobile payments since the announcement of Apple Pay in September 2014. In January, Apple said that Apple Pay accounts for two-thirds of all mobile contactless payments on MasterCard, Visa and American Express networks. Panera Bread says Apple Pay accounts for 80 percent of its mobile payments.
Mobile payments in the U.S. are expected to nearly triple in the next five years, to $142 billion in 2019, according to the latest projection from Forrester Research. The fastest growing subcategory is in-person payments -- such as those using mobile wallets -- which are expected to grow tenfold in the next five years from $3.7 billion in 2014. Other mobile payment categories, peer-to-peer transfers and remote transactions, are anticipated to grow more slowly.
A lot of the growth will come about because of Apple Pay. Apple's wasn't the first mobile wallet, and its technology is only an incremental improvement over what competitors such as Google Wallet offered before, but Apple introduced a cadre of loyal followers to the concept, says Peter Olynick, card and payments practice lead with Carlisle & Gallagher Consulting Group.
"Apple Pay was a major event just because of the size, scale and number of people -- the fan base, if you will -- that Apple brings with it," Olynick says. "Given the size of that company, it is almost impossible for them to do anything small."
Olynick says that his company's research shows that there has been close to a 50-50 split in the last few years between people who are interested in paying with mobile phones and those who aren't. That has stayed steady. What has changed, though, is the people who are open to mobile payments have begun avidly using them as they have more options to do so.
"The folks who are interested are really starting to become power users, almost being addicted to using it," he says.
Some warmer, some cooler
While the overall numbers were relatively unchanged in six months, the CreditCards.com poll did find statistically significant movements in demographic subgroups. Some warmed to the idea of paying by cellphone, some cooled.
Getting poll results. Please wait...
Poll respondents who are elderly or nonwhite warmed to the idea. In the September 2014 poll, 64 percent of those 65 and older had said they would never use cellphones routinely for payments. In March 2015, that percentage shrank to 52 percent. The percentage of nonwhite poll respondents who said they'd pay by cellphone always or most of the time jumped from 14 percent to 24 percent.
Backing off in enthusiasm were women, millennials and parents. Sixteen percent of women had said they'd pay by phone always or most of the time in the prior poll; just 11 percent said so in the new one. The percentage of millennials saying they'd never or hardly ever pay that way jumped from 48 percent to 58 percent. And parents saying "never" grew, from 37 percent last September to 43 percent in March.
Still a niche
Even with massive publicity and gangbuster growth, payments with mobile wallets compose only a small portion of all payments. For instance, total U.S. retail sales in 2014 totaled $3.2 trillion, according to the National Retail Federation. Mobile payments account for less than 2 percent of those sales.
Plenty of obstacles remain to widespread adoption: Relatively few retailer checkout registers -- and few phones -- have the Near Field Communications (NFC) technology required by Apple Pay and Google Wallet. The expected launch of two new mobile wallets that work without NFC (Samsung Pay and CurrentC) later this year could open mobile payments to a lot more smartphone owners. Still, some people are concerned about the security of their card data on a mobile device.
In a research note in December, KBW research analyst Sanjay Sakhrani wrote that Apple Pay could be among the first platforms to "change customer behavior from using mag-stripe physical wallet-based cards to mobile devices," but that more work would have to be done to offer "a compelling value proposition beyond a 'cool' and convenience factor."
Information technology manager Todd Strawser, 47, of Charlotte, North Carolina, says he would gladly use Apple Pay more with his iPhone 6 if more retailers accepted it. He uses it where he can, but that has mostly been at McDonald's, Subway and gas stations.
"I like its convenience. It's faster than handing over your card, and you can use it even if you left your wallet in the car," he says. "It also has more security features, rather than handing it to a retail person who could jot your information and use it later."
The CreditCards.com poll also found that:
- Men and women are equally enthusiastic about mobile payments. Sixteen percent of each gender group said they are interested in paying by phone always or most of the time.
- Interest in mobile payments is spread evenly through people of different income and education levels.
- Younger people tend to be more interested in paying by phone than older Americans. Of respondents ages 18 to 29, a quarter (24 percent) percent said they wanted to pay by phone always or most of the time. That figure dropped in older age categories, bottoming out at 8 percent of respondents aged 65 and up.
The poll was conducted by Princeton Survey Research Associates International on behalf of CreditCards.com.
Published: March 9, 2015
- Applications dip, credit market shows signs of cooling off – The market for consumer loans, including credit cards, pulled back in a February survey of consumers ...
- Online and mobile banking statistics – Bank branches aren't a thing of the past yet, but that could be the way they're headed now that consumers can deposit checks, check balances and even open accounts via computer or smartphone ...
- Fed: Card balances fell $3.8 billion in January – Credit card balances fell in January, according to the Federal Reserve ...