FRAMINGHAM, Mass. (7/12/12)--Mobile payments have more than doubled in popularity, reaching in excess of 33% of consumers surveyed--although payments have not yet made a large impact on the financial system--according to the IDC Financial Insights eighth annual Consumer Payments Survey, released Monday.
The report, "Business Strategy: Results from the 2012 Consumer Payments Survey," focused on the use of emerging payment technologies.
Of consumers who had made a mobile payment, more than half used PayPal Mobile (56%), with Amazon Payments and Apple's iTunes service tied at about 40%. Also, prepaid cards showed strong growth, particularly in the network branded and benefit submarkets.
"Based on our results, we expect to see continued growth in open-loop prepaid cards and mobile payments next year, and believe that the improvements being offered in electronic bill delivery will break electronic bill presentment and payment out of its doldrums as well," said Aaron McPherson, practice director, IDC Financial Insights. "The advent of new card-linked offer programs should increase the influence of rewards on the average consumer; however, this will depend on how many banks choose to move ahead aggressively with these programs, and how many merchants choose to support them."
He told American Banker
(July 10) that mobile payment's growth has not yet made a significant impact on the financial system.
Other findings include:
- Network-branded (open loop) prepaid cards have drawn neck and-neck with closed loop cards in consumer penetration. Strength was seen in all categories, including benefit and payroll cards. This could reflect economic and regulatory factors, as well as better marketing by financial institutions and independent issuers, said IDC Financial Insights.
- For the second consecutive year, both biller and bank-operated online bill pay sites were used by more than 50% of the consumers surveyed. Overall, 73.5% of U.S. consumers now use online bill payment. This confirms that online bill payment is now the dominant way bills are paid in the U.S., said the report.
- Despite the popularity of digital downloads, such as apps and music, more respondents reported buying physical goods with their phones than online services, digital goods, or virtual currency.
IDC Financial Insights emphasized the results should lend urgency to financial institutions' efforts to develop products in the prepaid cards and mobile payments areas. Demand clearly exists, and financial institutions need to make sure they are not left behind by non-financial institutions that are more narrowly focused on the opportunity, IDC Financial Insights said.
The company said reward programs are one of the strongest areas for financial institutions to build upon, because financial institutions are party to most commercial transactions and have the best data. They also have a history of offering rewards on their cards and working with retailers on cross-promotions. With the limits on debit card interchange creating a revenue gap, targeted offers provide a replacement revenue source, and can anchor ventures in the prepaid and mobile payments markets, IDC Financial Insights said.