If you’re a young, high-income consumer, there’s a good chance you’re among those that think their handheld device is as useful for paying for things as it is to send a text.
Of course, the trend for all ages is apparent: A recent Accenture survey on mobile payments found that 40% of North American consumers have used their smartphones to make a payment at a merchant location.1
That’s a 150% rise from the 16% usage found in a similar survey just two years ago.
But, consistent with other studies on payments, Accenture said that Millennials and wealthy consumers (those with household income of at least $150,000) are the most avid adopters, with 52% of Millennials and 55% of high-income consumers having used their phones as a mobile payment device.
With regard to overall payment trends, the survey found that traditional payment instruments will decline slightly as emerging payment instruments become more widely used. Accenture also noted that emerging payment methods will be supplements – and not substitutions for cash.
“By 2020, we anticipate the first decline in credit card usage in more than five decades and in debit card usage since they were introduced,” said Matthew Friend, managing director and head of Accenture Payment Services in North America.
- Other interesting tidbits from the survey:
- 54% of respondents said they expect to use cash on a weekly basis by 2020 – a 12% decrease from today.
- 72% said they prefer network providers as their mobile payment provider.
- 18% expect to use digital currencies on a weekly basis by 2020.
- 79% would increase usage of mobile payments if discounts or coupons were offered.
In all, Accenture said it found that consumer awareness and adoption of mobile payments has risen significantly compared to the company’s survey just two years ago. Awareness of mobile payments has increased from 73% in 2012 to 84% today, with the overall frequency of use increasing by 25%.
The growth in mobile payments may also contribute to overall noncash purchases, which could bolster the financial performance and stock prices of leading companies providing networks and processing services.
The Digital Dollars motif has gained 2.9% in the past month. In that same time frame, the S&P 500 has risen 2%.
In the past six months, the motif has risen 12.1%; the S&P 500 is up 7.8%.
Despite the rise in both awareness and usage, Accenture found that a significant opportunity for growth still exists.
According to the study, “87% of survey respondents regularly use a smartphone, but of those who use one, only 45% use it as a mobile payments device. In addition, 41% of smartphone users do not think their phone is equipped with mobile payments technology.”
An early wild card in the industry is the unknown impact that the relatively new Apple Pay system will have. Apple’s track record in consumer product development is beyond debate at this point, and its tie-in with the major credit card companies could make winners for consumers, merchants, and payment processors alike.
1Jim Marous, “Millennials Driving Future of Mobile Payments and Digital Currency,” thefinancialbrand.com, Nov. 18, 2014, http://thefinancialbrand.com/45284/banking-mobile-payments-bitcoin-research/, (accessed Dec. 1, 2014).