Recently, Vantiv and Mercator Advisory Group researchers interviewed merchant and financial industry executives to explore their attitudes toward evolving payment methods—and, especially, the worries that keep them awake at night.
Not surprisingly, mobile payments was high on the list. Executives worry about the cost of implementation and a lack of standards. Merchants wonder how to fit mobile payments into their existing infrastructure. And financial institution executives worry that if they don’t start soon, they will fall behind the competition—but if they move too fast, they might bet on the wrong technology.
Security remains a key concern. However, while they see problems with current mobile payment security, they are fairly optimistic about the effectiveness of methods such as multifactor authentication and tokenization to secure smartphone-based payments. One issue, EMV, is of special concern: no one wants to be the first to adopt it, because the technology is more costly than existing methods. But some fear they will be a target for fraudsters if they are the last.
Finally, industry executives cited their concerns about large technology and telecommunications companies making inroads in the market with their wallet offerings, with these new players getting between them and their customers.
Executives and Consumers: The Disconnects
The Vantiv/Mercator research also uncovered several potential disconnects between executive and consumer attitudes:
Drivers of payment choice Most industry executives believe consumers put the highest value on convenience, rewards, or both when considering payment methods. But consumers place more value on low cost-of-use, with 80% citing it as a key factor. Executives may be underestimating the impact increased fees could have on accounts, payment transactions, and customer retention.
Mobile payments adoption: Two-thirds of consumers think mobile payments will be common within five years. In the past, executives have put longer time frames on adoption, but this year, their attitudes are more closely aligned with consumer views.
What consumers want in mobile payments. Industry executives tend to think of mobile payments as a vehicle for using traditional card accounts only in a phone-based format. But consumers are interested in having tools that help manage receipts and rewards, track spending, and so forth. They want comprehensive mobile platforms that provide more information and tools to enhance the entire purchasing experience.
Prepaid cards: The research indicates that prepaid cards appeal to a wide range of consumers, and their use is likely to grow. But merchants generally don’t view prepaid as a primary form of payment, and financial institution executives tend to see it as tool for the underbanked (although some are now expanding their prepaid programs). In general, executives may be missing an opportunity to use prepaid cards to reach more consumers.
Industry executives face uncertainty and change—the kind of environment that has often led to “wait and see” strategies. But the research shows a clear shift away from that mind-set. While executives may not know exactly what actions to take, most now say that it is time to do something, to move ahead with emerging payment methods—and stay in step with consumers
Lorena Harris is vice president of corporate marketing at Vantiv, where she leads the Vantiv Insights Research program. For more insights, visit vantiv.com/research.
For more information, download Vantiv’s Executive Thinking on Payments 2013 whitepaper.
Vantiv is a leading integrated provider of payment processing strategies and advanced technology solutions for businesses and financial institutions. For 40 years, our team of committed professionals has made us one of the most trusted and respected organizations in the payment processing industry. We’ve driven many of the changes that prompted the shift from cash to electronic payments, and that innovative spirit continues to be our strength. We’re innovators, thought leaders, boundary pushers. Vantiv is changing the face of payments.