Online shoppers find mobile payments safer than credit cards

Online shoppers find mobile payments safer than credit cards

Mobile payments are one of the fastest-growing trends in commerce. In fact, recent research shows that customers might find them safer than using credit cards when it comes to online purchases.

Mobile payments gaining a foothold
According to a new study from Juniper Research, the gross transaction value of mobile payments for consumer goods is on the rise. Juniper estimates it will triple from $60 billion to $170 billion by 2015.

Another study, this one from the business analytical services firm KPMG, found that 83 percent of business executives say their customers will be "mainstream" users of mobile payment technology by 2015. Compare that with the 9 percent of executives who see mainstream use of mobile payments today.

KPMG itself has even higher expectations than its survey respondents, according to a news release about its findings.

"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.

Several factors are priming the mobile payments industry for such rapid growth. "Key players" are already rolling out mobile payments, according to Matuszak, and consumers' interest in mobile payments is growing.

Safety first
As mobile payments grow in popularity, they may replace credit card purchases as the norm for online shoppers. The reason? Protection of personal information.

A recent survey from Javelin Strategy and Research and PaymentOne found that four out of five consumers would dole out more money online if they were guaranteed the payment would be easy to make, and, more importantly, safer to make.

And what method did consumers deem the safest? About 80 percent of survey respondents said direct carrier-billed mobile payments are safer than using credit or debit cards to make purchases online. With carrier-billed mobile payments, consumers are billed for their purchases directly by their phone carriers -- there is no need to re-enter sensitive credit card information.

The payoff of safety
Making customers feel more secure could have a huge payoff, Javelin and PaymentOne found. Their survey's findings suggest that, if merchants and mobile payment software providers did a better job of securing consumers' personal financial information, their efforts would add nearly $110 billion to the digital retail market every year. That's because nearly 80 percent of customers said they would buy more from merchants that allowed mobile carrier-based payments instead of requiring a credit card or credit card information.

"With an estimated $110 billion in new revenue for digital merchants being left on the table each year in the U.S. alone, this 'commerce gap' represents a massive untapped opportunity," said Phil Blank, managing director at Javelin Strategy and Research, in a news release about the survey.

According to PaymentOne, merchants need to do more to prevent customers from shying away when it comes time to check out. In fact, according to the survey, more than 50 percent of customers abandon their potential online purchases at checkout because they are hesitant to enter sensitive information.

Meanwhile, roughly 60 percent of respondents said they are more likely to buy goods from online retailers that offer "no credit card" purchase options, like carrier-based payments. The study notes that merchants who provide such options could gain $89, on average, per consumer.

"Consumers' concerns around the security and privacy of online payment transactions are staring digital merchants in the face and demanding attention," said Brad Singer, executive vice president of PaymentOne, in a news release about the survey.

Published: January 11,2023