According to the survey, more than 90% of British consumers are aware of mobile payments, but this does not mean that they will use this wireless payment function. Morgan Beard, strategic marketing director of TSYS UK, discussed with PYMNTS, a US payment media, some of the real thoughts of British consumers on mobile payments and three things that need to be done to promote the development of mobile payments in the UK.
PYMNTS: What was the purpose of the 2016 study on U.K. consumer payments?
MB: Consumers are the driving force of the industry and we need to understand their mindsets. Last year, we published our first report on UK consumer payments. This year’s report focuses on payment hot topics. The report has already touched on some of the hottest topics in the industry such as P2P payments, mobile payments and virtual currencies. The purpose of our research is to understand and tap into the consumer mindset trends in order to predict how consumers will react to the adoption of new payment technologies in the future.
PYMNTS: There has been a lot of talk in recent years about mobile payments making a breakthrough. But in the UK, efforts to put mobile payments into practice have been less successful. What are the main reasons?
MB: In general, if we want to develop mobile payment, we need to face the challenges of popularizing three technologies. From the consumer side, the penetration rate of smartphones has reached its peak, and from the perspective of merchant adoption, they are concerned about POS machines and how to update the machines to support NFC payments. Secondly, people also have concerns about security factors such as security and verification codes.
Smartphones are now common, and as for NFC devices, thanks to the efforts of Visa and MasterCard, NFC payment devices will be popularized throughout Europe by 2020. The remaining problem is consumers' concerns about security issues. Our research report also stagnates on this issue. Consumers regard security considerations as the determining factor in whether mobile payments will become popular. But what's interesting is that after we explained the security of verification codes to some consumers, one-third of the feedback indicated that they were willing to use mobile payments. This is very encouraging for us, but two-thirds of people are still skeptical about it.
In this way, the key to whether mobile payment can maintain its long-term vitality lies in whether it can overcome the limitations caused by technology. All this depends on whether the added value created by the entire economic system for consumption can surpass traditional bank card payments. For example, if we get various promotional information from merchants and make it mobile, I believe that two-thirds of those who are hesitant will immediately choose mobile payment.
PYMNTS: Are there any exciting findings from this year’s research?
MB: One of the most obvious things is how familiar these people are with the concept of payments. Apple Pay was launched in the UK in July 2015, and with it, more and more people are beginning to understand mobile and wireless payments. When it comes to P2P payments and cryptocurrencies, people's understanding is far beyond our expectations. 70% of people know about P2P payments, and 43% know about cryptocurrencies like Bitcoin . These data show that it will be very interesting to enter this field to observe and participate in the industry.
PYMNTS: With the rise of mobile banking, it seems that consumers are beginning to want to manage and control their bank cards themselves. From that perspective, what do these data suggest?
MB: It all comes down to consumer engagement. For our report, we look at the convenience and control that technology creates in today’s consumers’ digital lives. Just as the iPhone makes it easy to control apps, it also makes it easier to pay with bank cards. In our research last year and this year, we confirmed the importance of these banking tools to create convenience for consumers to manage and monitor their accounts.
For example, consumers are reminded after each transaction and their accounts are temporarily locked to prevent unauthorized transactions. These two are the two most important security features considered by respondents, with more than 60% believing that it is very important to be able to do this.
PYMNTS: Why is mobile payments valuable to consumers?
MB: Many people find mobile payments attractive. In fact, 45% of respondents find it very valuable, which is 7 percentage points higher than the same period in 2015. As expected, young people are more interested, but there is also a group of people over 65 who are willing to use it because they are in a stable income group and it is also very convenient for people with pensions and retirement funds.
PYMNTS: Wireless payments have reached a critical stage, but not everyone is embracing them. What’s the reason?
MB: When asked whether they are familiar with wireless payments, more than 90% of the respondents said yes, but only 50% actually use it, mainly among young consumers aged 18-34 and wealthy families with an annual income of more than 50,000 pounds.
I think the time has come to expand mobile payments to older age groups, especially those who are concerned about payment security, and people outside of London should also be cultivated as potential users. Overall, I think more and more people are using wireless payments.
PYMNTS: What role will cash play in the UK in 2020?
MB: According to the UK Payments Council, cash-based consumer and commercial transactions fell by 50% last year and are declining by 4% year on year. We can expect this percentage to fall even faster in the coming years, especially as e-commerce grows rapidly and mobile wireless payments become more mainstream. Emerging P2P payments and virtual currencies are still somewhat unfamiliar to people, and we hope they will develop in the right direction.
In four or five years, the status of cash will definitely decline. As the non-cash payment culture spreads, there will be more and more cooperation in the industry.
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