Just imagine it: you're holiday shopping, or perhaps ordering a drink at your favorite coffee shop. While the gift wrappers start cutting colorful paper or the barista begins steaming your nonfat soy milk, you settle the bill with a simple tap of your smartphone against the merchant's point-of-service terminal. It's not the future you're looking at – the technology is already here, albeit at an emerging level. A combined 13% of Americans indicate that they have either paid in this manner themselves (4%) or witnessed it firsthand (8%), with predictably stronger experience levels among smartphone owners (18%, 7% and 11%, respectively).
But is this just a passing gimmick, or the first indicator of a fundamental shift in how Americans are likely to pay for goods and services in the years to come? The majority of Americans appear to be anticipating the latter, with over six in ten indicating that they believe smartphone payments will eventually replace both payment card (66%) and cash (61%) transactions for a majority of purchases.
These are some of the results of The Harris Poll of 2,383 adults surveyed online between November 14 and 19, 2012 by Harris Interactive.
Change is down the road – but not necessarily around the corner…
While many Americans perceive this change in payment culture as a likely eventuality, considerably fewer appear to perceive it as imminent: although the aforementioned two-thirds (66%) believe smartphone payments will eventually replace payment card transactions, considerably fewer (32%) believe this will happen in less than five years. Similarly, fewer than half of those Americans who believe smartphone payments will eventually replace cash for the majority of purchases (61%) believe this will happen in less than five years (26%).
…And not necessarily for me
Despite the majority of Americans indicating that such changes to our collective purchasing habits are ahead, few display a strong interest in replacing their own cash or card transactions with the tap of a smartphone. Although over one-fourth of Americans (27%) and nearly half of smartphone users (44%) report overall interest in being able to use their smartphone to process in-person payments, far fewer specify being very interested in doing so (8% and 16%, respectively). Nonetheless, it is worth noting that overall interest levels point to some segments which are most interested overall in this ability:
Echo Boomers (40%) and Gen Xers (34%), perhaps predictably, display considerably stronger interest in doing so than either Baby Boomers (18%) or Matures (7%).
Men (32%) are significantly more interested in this technology than women (22%).
Those in households with children (38%) also display considerably stronger overall interest than those in households with none (22%).
Among those who indicate being either not very or not at all interested in being able to make smartphone payments, security is a clear, if predictable, factor: half (51%) say they don't want to store sensitive information on their phone, and four in ten (40%) don't want to transmit sensitive information to a merchant's device. Another predictable impediment is the simple matter of smartphone ownership, with half (50%) indicating they are not interested in doing so because they don't use a smartphone. The other top impediment speaks to a deeper issue facing the mobile payment industry: just over half of those not interested (52%) indicate that they simply don't see any reason to switch from cash or payment cards.
Looking specifically at smartphone owners not interested in using their devices to process payments, security concerns (68% don't want to store sensitive information on their phones, 51% don't want to transmit sensitive information to the merchant's device) and general apathy toward such a shift (62% don't see any reason to switch) are stronger still.
Even initiatives to more seamlessly integrate smartphones into our payment habits appear to carry only moderate potential to move the needle on Americans' interest. While just over one-fourth of Americans (28%) and four in ten smartphone owners (40%) indicate that being able to make mobile payments while still taking advantage of their existing credit card reward programs would make them more interested in doing so, far fewer (9% and 15%, respectively) specify that they would be much more interested. Moreover, only 8% of those not interested in paying with smartphones indicate that this would make them more so (and only 1% indicate it would make them much more so).
Similarly, when asked how the ability to use their smartphones as a "digital wallet" with electronic versions of all the identifications, loyalty program cards and other documentation normally carried in a wallet – thereby allowing them to leave their physical wallets at home – three in ten Americans (30%) and over four in ten smartphone owners (43%) indicate it would make them more interested in doing so, but far fewer (8% and 12%, respectively) specify that it would make them much more interested. Only 12% of those not interested in paying with smartphones overall indicate that this would make them more interested (and only 2% indicate it would make them much more interested).
When debit cards came to prominence, they did so by responding to a genuine consumer desire – even if consumers weren't aware of that desire until the solution presented itself. By combining the use-anywhere convenience of a credit card with the ability to draw from money in users' checking accounts instead of incurring debt, this new product fundamentally changed how Americans paid for goods and services, eventually outpacing cash as the top payment type.
Thus far, the mobile payment industry has yet to find a similar "in" with consumers. Finding such a silver bullet which gives Americans a reason to change how they pay will depend not only on bringing new ideas to the table simply because technology enables them – but paying attention to how Americans pay now and looking for a need that, once again, they may not even know is there.