Banks and technology companies betting on mobile payments have to overcome a very basic hurdle: most Americans still do not have smartphones.
Almost half of U.S. credit card customers use basic mobile phones, meaning they can call or send text messages but cannot connect to the Internet by phone, according to a survey this month from Lightspeed Research. Another 14% use “feature” phones, which have basic email and Internet connectivity but are not as advanced as smartphones.
“All evidence points to the fact that consumers want to do more and more on their mobile devices, ... but right now there’s no question that mobile payments are still in their infancy,” says Greg Flemming, a senior vice president in Lightspeed’s financial services group.
The report did not address the use of contactless-payment stickers that various companies offer that can adhere to any phone or other mobile device.
Several industries are anxiously waiting for the U.S. mobile payments market to mature. Big banks, credit card networks, telecommunication carriers and technology companies all are vying to develop ways for customers to pay with their smartphones at the checkout counter–even though most Americans believe such mobile wallets are “very unimportant,” according to one Lightspeed report (
Consumers also worry about the security of mobile phones, and they will have to be convinced that paying by cellphone is as secure as paying by traditional credit or debit card, industry insiders say.
Google Inc. launched its much-hyped mobile wallet last week, along with MasterCard Inc., Citigroup Inc., Sprint Nextel Corp. and First Data Corp. (
Some credit card customers may be more likely than others to start paying with their phones because they already have the technology to do so, Lightspeed found.
American Express Co. and HSBC, for example, have the highest percentages of customers with smartphones, in part because both companies cater to wealthier, tech-savvy customers.
“It speaks in part to the demographic and in part to the opportunity,” Flemming says. “What that means is American Express has an opportunity to interact more with its customer base.”
Meanwhile, 51% of Discover Financial Services cardholders relied on basic phones, which Flemming and other analysts say reflects the company’s relatively older customer base.
“In general, if you skew older, you’re probably going to be slower to take up the newer things,” says David True, the executive director of consultancy MCAWorks.
What do you think about this? Send us your feedback. Click
