Australian customers cold on mobile payments

While banks have their elbows out to claim firsts in tap-and-go mobile phone payments, a new banking survey suggests that consumer demand for them is, at best, soft.

Fewer than 30 percent of consumers who responded to an Effective Measure survey indicated that they intended to use mobile device payment services over the next six months.

And while banks have been investing heavily in mobile banking services to attract younger consumers, fewer than six percent of under-24s who responded to the survey said such services would be their basis for a decision to change banks.

IBRS analyst Guy Cranswick, who wrote the survey on behalf of market intelligence firm Effective Measures, said the results were surprising.

That fewer than 30 percent of consumers across all age groups – and in most age categories fewer than 25 percent - were prepared to use mobile payments in the next six months inferred that take-up of mobile contactless payments would be weak, he said.

While the survey didn’t specifically tighten the wording of its questions to “contactless mobile phone payments” the wider sentiment toward mobile payments indicated that demand for them would be weak, he said.

“What it does say about mobile payments generally is that there is just not a huge level of interest," Cranswick said.

“The younger age group really surprised me – it’s all EFTPOS and debit cards as a way of monitoring spending without getting carried away. It’s even true of contactless credit [card payments]. Mobile services perhaps works as a means of checking your balance, but there’s not a great upswing in mobile payments."

Australian banks have been experimenting with tap-and-go mobile payments using bridging technologies such as near-field communication (NFC) enabled mobile phone cases and stickers.

However, they have been slower to produce a system based on NFC capability built into handsets.

Westpac and Commonwealth Bank have been jostling to be first to offer tap-and-go mobile phone payments based on Visa payWave and Mastercard PayPass payments platforms respectively.

Commonwealth Bank announced it would offer the service last October but remained vague on its timeline. Last December it narrowly beat Westpac to launch a service employing NFC built into Samsung’s Galaxy S4. 

At around the same time Westpac announced that customers with would be able to make tap-and-go payments using Samsung’s Galaxy S or Galaxy Note 3 smartphones.

Cranswick said banks could benefit from further segmenting their marketing to demonstrate the value of mobile payments among consumers in the 25 to 55 age brackets.

“They’ve probably been relying on the young consumer as a way of gaining and keeping accounts, but they need to be looking at delivering some of the messaging to older consumers," he said.

The survey also uncovered a few other surprise findings. Among them; respondents who indicated that they did not check their accounts using mobile services said it was due to a lack of necessity rather than security concerns.