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Consumer Attitudes towards Mobile Payments - UK - August 2016

“Despite the huge interest in mobile payments across the financial services industry, Mintel’s research suggests that actual usage is low. Companies have two main challenges to overcome to achieve growth: they have to convince consumers that paying with a smartphone is a secure transaction method; and they need to give people a compelling reason to switch from using cards. Consumers are most likely to use mobile payments if they are rewarded for doing so through schemes such as Android Pay Day.”

Rich Shepherd, Senior Financial Services Analyst

This report looks at the following areas:

  • Security concerns are consumers' biggest turn-off
  • Incentives are the key
  • A cardless, not cashless society

This Report looks at consumer attitudes towards mobile payments. This includes an examination of the market context surrounding contactless and mobile payments and regulatory changes in the industry, as well as looking at the main mobile payment services and innovations. Mintel’s exclusive consumer research investigates the type of payments people make, how aware they are of mobile payment services and what types of transactions are made through smartphones.

Finally the Report examines consumer attitudes such as why people would choose to use make mobile payments, their thoughts on the security of these payments, and consumer concerns about the usability of the technology.

For the purposes of this Report, Mintel has used the following definitions:

  • Peer-to-peer mobile payment services: A number of the best-known mobile payment services involve transferring money via an app, rather than making a point-of-sale transaction. This includes the most well-known and widely used payments service, PayPal. These schemes are often used to transfer funds between individuals, but can also be used to pay companies.
  • Point-of-sale mobile payment services: Point-of-sale mobile payment services are schemes which allow in-store purchases. Currently, most of these services rely on near-field communication (NFC) technology. These are the systems which are most closely associated with the term mobile payments as a competitor to cash and cards. This includes Apple Pay and Android Pay.

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
        • Peer-to-peer mobile payment services
          • Point-of-sale mobile payment services
          • Executive Summary

              • The market
                • Contactless cards have enjoyed huge recent growth…
                  • Figure 1: Monthly contactless spend and average spend per card, 2014-16
                • …paving the way for mobile payments
                  • PSD2 opens new opportunities for innovation
                    • Companies and brands
                      • A third of PayPal payments to be made on mobiles by the end of 2016
                        • Android Pay joins the competition
                          • The consumer
                            • NFC-enabled tech devices are mainstream
                              • Figure 2: Smartphone ownership, by operating system, April 2016
                            • Use of contactless continues to grow
                              • Figure 3: Use of payment methods, April 2016
                            • Paypal becomes an incumbent, while Apple Pay shows signs of growth
                              • Figure 4: Awareness and use of selected mobile payment schemes, April 2016
                            • A third of smartphone users have made a mobile payment
                              • Figure 5: Types of payments made through a smartphone in the last year, April 2016
                            • Incentives are the key to changing payment habits
                              • Figure 6: Attitudes towards mobile payments, April 2016
                            • Data security is the biggest concern about mobile payments
                              • Figure 7: Concerns over mobile payments, April 2016
                            • What we think
                            • Issues and Insights

                              • Security concerns are consumers’ biggest turn-off
                                • The facts
                                  • The implications
                                    • Incentives are the key
                                      • The facts
                                        • The implications
                                          • A cardless, not cashless society
                                            • The facts
                                              • The implications
                                              • The Market – What You Need to Know

                                                • Contactless cards have enjoyed huge recent growth…
                                                  • …paving the way for mobile payments
                                                    • PSD2 opens new opportunities for innovation
                                                    • Market Context

                                                      • Contactless payments
                                                        • Contactless hits the mainstream…
                                                          • Figure 8: Monthly contactless spend and average spend per card, 2014-16
                                                        • …but it took almost a decade to do so
                                                          • What does the growth of contactless mean for mobile payments?
                                                            • Mobile payment schemes
                                                              • The fragmented marketplace adds to consumer uncertainty
                                                              • Regulatory and Legislative Changes

                                                                • PSD2 increases the scope for innovations in payments and money management
                                                                • Companies and Brands – What You Need to Know

                                                                  • A third of PayPal payments to be made on mobiles by the end of the year
                                                                    • Android Pay joins the competition
                                                                      • Innovations look to a cardless future
                                                                      • Peer-to-Peer Mobile Payment Services

                                                                          • PayPal
                                                                            • Profile
                                                                              • Recent activity
                                                                                • Paym
                                                                                  • Profile
                                                                                    • Recent activity
                                                                                      • Pingit
                                                                                        • Profile
                                                                                          • Recent activity
                                                                                          • Point-of-Sale Mobile Payment Services

                                                                                              • Apple Pay
                                                                                                • Profile
                                                                                                  • Recent activity
                                                                                                    • Android Pay
                                                                                                      • Profile
                                                                                                        • Recent activity
                                                                                                          • Barclays
                                                                                                            • Profile
                                                                                                              • Recent activity
                                                                                                                • Starbucks
                                                                                                                  • Profile
                                                                                                                    • Recent activity
                                                                                                                    • Innovation in Mobile Payment Services

                                                                                                                      • Cash in a cardless society
                                                                                                                        • Android Pay Day offers rewards to incentivise use of Android Pay
                                                                                                                          • Barclaycard introduces instant card replacement
                                                                                                                            • Samsung Pay is on its way
                                                                                                                            • The Consumer – What You Need to Know

                                                                                                                              • NFC-enabled tech devices are mainstream
                                                                                                                                • Use of contactless continues to grow
                                                                                                                                  • Paypal becomes an incumbent, while Apple Pay shows signs of growth
                                                                                                                                    • A third of smartphone users have made a mobile payment
                                                                                                                                      • Incentives are the key to changing payment habits
                                                                                                                                        • Most people are uncomfortable with the cashless society
                                                                                                                                          • Data security is the biggest concern about mobile payments
                                                                                                                                          • Mobile Device Ownership

                                                                                                                                            • It’s consumer apathy, not technology, that’s holding the market back
                                                                                                                                              • Figure 9: Mobile device ownership, April 2016
                                                                                                                                            • Waiting for Android Pay to hit the high street
                                                                                                                                                • Figure 10: Smartphone ownership, by operating system, April 2016
                                                                                                                                            • How do People Pay?

                                                                                                                                              • Uptake of contactless payments shows how slowly habits change
                                                                                                                                                • Figure 11: Use of payment methods, April 2016
                                                                                                                                              • Are contactless credit cards gaining more traction?
                                                                                                                                                • Figure 12: Use of payment cards, April 2016
                                                                                                                                              • Cheques are still hanging in there
                                                                                                                                                • Figure 13: Use of non-card payment methods, April 2016
                                                                                                                                            • Awareness of Mobile Payment Schemes

                                                                                                                                              • PayPal: No longer a challenger brand?
                                                                                                                                                • Figure 14: Awareness and use of selected mobile payment schemes, April 2016
                                                                                                                                              • Apple Pay: Signs of progress, especially among Apple Watch owners
                                                                                                                                                • A fragmented market, with sizeable gaps in consumer awareness
                                                                                                                                                  • Age profile points towards PayPal’s incumbent status
                                                                                                                                                    • Higher levels of engagement among the more affluent…
                                                                                                                                                      • …and contactless card users
                                                                                                                                                        • Figure 15: Use of selected mobile payment schemes, by use of contactless cards in the last three months, April 2016
                                                                                                                                                    • Type of Payments Made Through a Smartphone

                                                                                                                                                      • A third of smartphone users have made a payment using their phone
                                                                                                                                                        • Figure 16: Types of payments made through a smartphone in the last year, April 2016
                                                                                                                                                      • 17% of people have used their mobile to pay in a shop or restaurant
                                                                                                                                                        • Payment is only of secondary interest when it comes to dedicated apps
                                                                                                                                                          • Figure 17: Interest in smartphone services for restaurant apps, March 2015
                                                                                                                                                        • It’ll take incentives to rapidly shift consumer behaviour
                                                                                                                                                          • Peer-to-peer split between PayPal and bank apps
                                                                                                                                                            • Smartwatch owners have made the switch to mobile payments
                                                                                                                                                                • Figure 18: Types of payments made through a smartphone in the last year, by devices owned, April 2016
                                                                                                                                                            • Attitudes towards Mobile Payments – Pull Factors

                                                                                                                                                              • Convenience isn’t enough to change payment habits
                                                                                                                                                                • Figure 19: Attitudes towards mobile payments, April 2016
                                                                                                                                                              • Offer incentives, not convenience
                                                                                                                                                                • More than a payments app
                                                                                                                                                                • Attitudes towards Mobile Payments – Security

                                                                                                                                                                  • Most people are uncomfortable with the cashless society
                                                                                                                                                                      • Figure 20: Attitudes towards mobile payments, April 2016
                                                                                                                                                                    • Around a third of under-35s would pay through social media
                                                                                                                                                                      • Figure 21: Comfort using a social media or messaging app to pay friends and family or retailers, by age, April 2016
                                                                                                                                                                    • Proving security is a hurdle that mobile payment providers must get over
                                                                                                                                                                    • Concerns Over Mobile Payments

                                                                                                                                                                      • Data security is the biggest worry…
                                                                                                                                                                        • Figure 22: Concerns over mobile payments, April 2016
                                                                                                                                                                      • …and is shared regardless of contactless experience
                                                                                                                                                                        • Figure 23: Concern over security issues surrounding mobile payments, by contactless card use, April 2016
                                                                                                                                                                      • Usability is a smaller worry, but could still hold back growth
                                                                                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                          • Abbreviations
                                                                                                                                                                            • Consumer research methodology

                                                                                                                                                                            Companies Covered

                                                                                                                                                                            To learn more about the companies covered in this report please contact us.

                                                                                                                                                                            Consumer Attitudes towards Mobile Payments - UK - August 2016

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