Down at CHYP End we work on a pretty wide variety of new payment systems and schemes around the world and we understand that consumer trust is seen to be an important factor in determining which of them might succeed or fail. But is it really true? Is trust really a determining factor or are there other ways to sway consumers?
A recent survey has revealed that consumer trust in newer payment methods has declined significantly in 2014. The survey, in which 650 UK residents answered questions about their banking and payments habits, also indicates that, for the third consecutive year, cash was seen as the most secure (73%)[From UK: consumer trust in newer payment methods drops by the wayside, cash still king | The Paypers]
This is, of course, mad. Cash is the least secure way for consumers to pay for anything, no matter how you look at it. Getting your cash back from a retailer who does not deliver or a holiday company that goes bust or a tradesman who does a shoddy job can be very difficult. And cash is what gets lost and stolen. And if I end up with counterfeit cash it’s my problem and there’s nothing I can do about it. The idea that cash is in any way secure is laughable and I am genuinely baffled as to how anyone who has been through a minimum of 11 years of compulsory education might think otherwise.
Nearly 71% of respondents believed mobile payments to be the least secure payment method. The results show that whilst the number of people making mobile payments has increased, nearly double the amount of people perceive the mobile device to be the least secure when compared to the 2013 survey results (38%).[From UK: consumer trust in newer payment methods drops by the wayside, cash still king | The Paypers]
Ludicrous, of course. But remember that one in four of those people think dodos still exist, so you should take anything they say on any topic whatsoever with a big pinch of salt. Mobile payments are far more secure than a great many alternatives (including cards – I’ll blog about this again soon). And in any case it may not matter what people say about new payment systems as compared to what they do with new payments systems. The figures seem to show that while three-quarters of Brits think that mobile payments are insecure, more than half of Brits want to use them.
A survey from payments and loyalty specialists Logic Group has found that UK consumers are embracing new technologies such as contactless and mobile payments… Being able to pay through a mobile device is a popular request from survey respondents (54 %), while one in five consumers is also interested in paying for goods through wearable technology.[From UK consumers embrace contactless and mobile payments – Payments Cards & Mobile]
In fact, Brits are pretty bullish about this apparently insecure technology because not only do half of them think that they would like to use mobile payments themselves, a third of them think that mobile payments will become the preferred method of payment in a relatively short time! So the general public appear to simultaneously believe that mobile payments are insecure and they will become our main way of paying for things.
A new study published by Experian reveals that a third of the UK population (33%) believes credit and debit cards will no longer be the preferred method of payment in 2020, as paying with a smartphone will take over.[From UK adults believe that smartphone payments will outpace credit and debit cards by 2020 – Payments Cards & Mobile]
I think that the key to understanding peoples’ responses to surveys like this is to remember that they don’t understand the slightest thing about the security of electronic transactions and therefore their opinions are based only on prejudice. Why American consumers, for example, would imagine that paying with a trivially-counterfeitable magnetic stripe is better than paying with a secure mobile alternative is completely beyond me. But they do.
Only one percent of respondents believe using a third party mobile payment provider such as Apple Pay or Google Wallet is a safe way to pay for in-store purchases.[From Survey: Consumers Dubious of Mobile Payment Security | Tripwire]
So, broadly speaking, people think that mobile payments are not secure, but since they don’t care about security and value convenience more highly, they will use mobile anyway. At least I think that’s what it all means. Look at the early figures coming out of Apple Pay, which apparently now accounts for the substantial majority of all contactless payments in the US. Whatever people might think about the security, they tap and pay with it. This is why mobile payments will succeed: because they are convenient. I always have my phone in my hand when I’m (for example) getting on the Tube so I might as well use it.
What these results might also mean is that it is important not to listen to the general public about anything at all. This is not my curmudgeonly take on the general ignorance of our barely-literate hordes but in itself a statistically well-founded observation.
British public wrong about nearly everything, survey shows[From British public wrong about nearly everything, survey shows – Home News – UK – The Independent]
They’re wrong about nearly everything, and mobile payments are no exception. Whatever they say about trust, they will do what’s easiest.