Financial Institutions a Major Influence on the Adoption of Mobile Payments

With all forms of mobile commerce on a boom – including not only the one driven by location-based services but also the somewhat unexpected in-store mobile commerce and couch commerce – we are experiencing a drastic increase in purchases made through mobile payments. It certainly seems as if companies that are on the forefront of mobile payment/mobile wallet technologies, such as PayPal, Isis, and Google, and the early adopters such as Amazon and eBay can claim to be the kings of mobile commerce!
But unfortunately, they aren't. Not yet, anyway.

The surprising news for them is researchers have found that, at present, most consumers still place their highest trust on banks and credit card companies for their mobile payments, and studies show they are more likely to have their mobile payments coursed through those rather than through operators such as Isis, Google, PayPal, or Amazon.

The data was gathered from surveys conducted by mobile analyst Chetan Sharma and by KPMG, a worldwide network of professional firms that provide tax, audit, and advisory services.

Trust issues

KPMG reported during its 5th Annual Global Consumer & Convergence Survey that 56% of consumers felt most comfortable with a financial service company handling their mobile commerce transactions.

In Sharma’s survey of 150 industry insiders, 37% of the respondents believed that financial companies will continue to define mobile commerce through 2012.

A possible cause of this is that consumers are getting more careful about protecting their personal and financial information. With laws in place to prevent banks and credit card companies from revealing such information, we naturally feel more comfortable entrusting these companies with such sensitive stuff.

Now with most other Internet sites, it’s a whole different story – or so we suspect. While these sites have their privacy policies that detail to us what their companies do with the information they gather, the simple truth is that many of us simply do not read privacy policies, and so the paranoia (justified or otherwise) remains.

Does this mean that mobile commerce initiatives such as Google Wallet, PayPal, or Isis are doomed? Not necessarily. The fact is, most of these firms have already formed partnerships with banks and credit card companies.

Nonetheless, there is a challenge placed upon mobile commerce companies to eliminate the trust issues that consumers understandably have. Whoever can do so will gain a very valuable competitive edge in the mobile payments category, which is likely to be the biggest breakthrough category in 2012.

Yash Talreja, Independent Consultant