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Security Concerns and Problems at the Register Continue to Depress Mobile Pay Usage and Net Promoter Scores

October 25, 2017

(New York, NY):  Mobile pay usage among eligible consumers is down 5% compared to this time last year (25% vs. 30%). And the decline in adoption is expected to continue into Q4 – a period that has seen seasonal dips in Mobile Pay usage the past two years, according to Auriemma Consulting Group’s Mobile Pay Tracker. This new research reveals a myriad of reasons why consumers aren’t adopting mobile payments quickly, including a lack of need and interest, and that Net Promoter Scores (NPS) are seeing significant declines. But some barriers are directly influenceable by merchants and issuers alike, namely security concerns and problems at the Point of Sale (POS).

Nearly one-third (32%) of consumers cite security concerns as a top barrier for using mobile payments. A slightly smaller proportion (21%) actually believe the method is unsafe. Auriemma’s research identified specific ways mobile pay providers could alleviate concerns that block the trialing of mobile payments.

For one, 58% of consumers want issuers to assure them that mobile payments fraud will be covered by the bank, similar to card-based payments. And 57% of customers would like to see data demonstrating the security of mobile payments, with 43% wanting direct comparisons to more common payment methods such as magnetic stripe and chip cards.

“Issuers who do these things could find themselves at the top of the mobile wallet for new adopters within their customer base,” says Jaclyn Holmes, the Director of Auriemma’s Payment Insights. “In an environment of heightened consumer anxiety regarding data breaches, it is critical to clearly communicate mobile payments’ security to customers.”

Confidence with security alone, however, isn’t enough to grow mobile pay adoption. Merchant acceptance is crucial for establishing habitual use, but many Pay users run into problems at checkout. These issues at the POS are a great risk to the most active mobile pay users, who experience the highest incidences of disrupted transactions.

The majority of Samsung Pay (74%), Android Pay (63%), and Apple Pay (52%) users consider themselves to be at least somewhat active. A notable proportion of each have said they encountered a problem at the register (44%, 33%, and 37%, respectively). The top reason for the issue, however, is unfamiliarity of store personnel (55%) followed closely by problems with the actual terminal, including “transaction did not go through” (46%) and “terminal took too long” (35%).

These issues have a clear impact on Pay user’s likelihood to recommend the service. Auriemma research reveals sharp declines between Q4 2016 and Q3 2017 in the Net Promotor Scores (NPS) of Apple Pay (from 22 to 4), Android Pay (from 18 to 13), and Samsung Pay (from 46 to 21). While Samsung Pay’s technology should render it mostly immune to problems at the POS, even it has had difficulty staying away from issues.

“One of the key benefits of Samsung Pay is that it can be used anywhere that accepts cards,” says Holmes. “But even its enthusiastic user base risks becoming disenchanted by recurring issues at the POS.”

Problems at the register don’t just impact behavior at the transaction-level. Half of those who had problems at a retail location that accepts mobile payments say the issue made them use the service less often overall. Problems at POS are particularly perilous for cards at the top of the digital wallet, who have the most to lose if the Pay transaction is unsuccessful. In fact, 45% of in-store Pay purchasers quit trying to use mobile payments entirely, and use a physical card instead.

There are many ways to educate those wary of the method, but the real question is whether issuers and merchants are willing to put in the time to train their customers and employees. While merchants may want to offer their customer’s preferred payment method, offering it without the proper employee training and support stops mobile payment adoption in its tracks. Likewise, issuers who make their card compatible with a mobile wallet without educating customers of its benefits are forfeiting potential utilization. Issuers who want to remain or become top of the mobile wallet, and merchants looking to provide a seamless payment experience for those Pay-preferred, play a pivotal role in getting them off the ground.

Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma Consulting Group (Auriemma) in July/August 2017, among 1,505 mobile pay eligible consumers. Respondents were screened to own an iPhone 7/7+/6/6+/6s/6s+ or Apple Watch (in combination with an iPhone 5/5C/5S) – a Samsung Galaxy S8, S8 Edge/Edge+, S7, S7 Edge, S7 Active, a Samsung Galaxy S6, S6 Edge/Edge+, S6 Active or Galaxy Note 5, Note 7 – Gear S2 or S3 watch (in combination with an Android/iPhone smartphone) – and/or other Android phone with KitKat (4.4) OS or newer. All respondents also have a general-purpose credit card in their own name. In addition to the quantitative web survey, eleven in-depth interviews (IDIs) were conducted in August 2017.

About Auriemma Consulting Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.  Founded in 1984, Auriemma has grown from a one-man shop to a nearly 50-person firm with offices in New York and London.  For more information, visit Auriemma’s website at www.acg.net or contact Jaclyn Holmes at 212-323-7000.