As companies race to take advantage of the mass adoption of smartphones and rapid development of new technologies to offer mobile payment services, executives believe the use of a mobile phone or device to make payments or conduct banking transactions will require four years to become widely accepted by consumers, according to a global survey of business executives by KPMG International, a global network of firms providing audit, tax, and advisory services.
The KPMG survey, 2011 Mobile Payments Outlook, of nearly 1,000 executives in primarily the financial services, technology, telecommunications, and retail industries globally found that 83 percent of the respondents believe that mobile payments will be mainstream within four years, compared to only nine percent who see them as mainstream today.
In fact, 46 percent believe mobile payments will be mainstream within two years.
“We believe that exploding smartphone growth and myriad opportunities will grow mobile payments at a much faster rate than our respondents anticipate,” said Gary Matuszak, KPMG global chair of the Technology, Communication and Entertainment practice, in a statement. “A wide variety of payments is ready for adoption, as several key players already provide or are rolling out mobile payments, and interest among consumers in utilizing mobile payments is growing, in line with the industry’s readiness to deploy them.”
Most of the executives said that mobile payments are now or will be reasonably important in the future, with specialist online systems building on its leading position as a payment method, and m-banking and near field communication (NFC) gaining significantly greater traction than today. Fifty-eight percent said they have a mobile payments strategy in place.
“While there is consensus about the significant value of this opportunity among executives across geographies and industries, the type and size of opportunity varies between developed and developing countries depending on depth and reach of the financial infrastructure in place. We believe that those firms willing to engage in cross-industry partnerships and [cooperation] are more likely to succeed and dominate the market due to the complex set of business relationships required to deliver mobile payments to a mass market,” said Matuszak.
While the majority of the business leaders surveyed believe consumers are currently concerned about security and privacy when using mobile devices, they believe other factors are more compelling attributes of a successful mobile payment strategy. Specifically, 81 percent believe convenience and accessibility are the highest attribute, followed by simplicity and ease of use, at 73 percent, security, at 57 percent, and low cost, at 43 percent.
At the same time, business leaders, globally and in the U.S., view security as the main challenge to developing mobile payments strategies. Technology and adoption of the technology is a distant second, followed by privacy.
“The business leaders understand that when it comes to consumers choosing a provider based on security, reputation can make the difference, and any damage to a business’ brand can prove costly, even to the extent of being a showstopper,” said Sanjaya Krishna, KPMG U.S. Digital Services leader in the TCE practice, in a statement. “As a result, leading businesses are adopting multiple approaches to alleviate customers’ privacy and security concerns.”
“One surprising result of our survey is the absence of divergent views across both industries and geographies, which speaks to the consensus that mobile payment is regarded as an opportunity for players across the value chain of commerce,” Matuszak said.
Race to lead
With the mobile payments industry poised to make a major leap in the coming years, several players are expected to play significant roles, though two groups of financial institutions are the current front-runners, say respondents.