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Emerging Payments

Consumers Shown To Trust Banks More Than Networks For Mobile Payments

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Consumers trust PayPal Inc. about as much or more than well-established payment networks such as Visa Inc. or MasterCard Worldwide when it comes to emerging mobile payments, but they place the most trust in their bank, new survey data suggest.

That is good news for banks, which ought to capitalize on their advantage with strategic-marketing initiatives to further entrench consumers’ trust in emerging mobile payments, advises Market Strategies International, which released the survey results Feb. 13.

Banks also should pay close attention to the relative trustworthiness of other financial-services brands and payment networks they may select as partners in providing mobile payments, Ann Graham Hannon, Market Strategies vice president of financial services, tells PaymentsSource.

In a survey of 2,000 U.S.-based smartphone users the firm conducted in October, 73% of respondents ranked their bank first as a trusted provider of emerging smartphone-based mobile payments. Visa Inc. ranked second at 67% of respondents, followed by PayPal Inc. at 62%, MasterCard Worldwide at 59%, American Express Co. at 54% and Discover Financial Services at 49%.

The results stacked up similarly among standard mobile-phone users, with 62% ranking their bank first, followed by Visa at 47% of respondents, PayPal at 45%, MasterCard at 42%, Amex at 34% and Discover at 32%.

While the overall lack of trust consumers place in major payment networks is somewhat eyebrow-raising, it is not entirely surprising given recent publicity about high-profile cyberattacks on major e-commerce websites, Hannon says.

Examples include a January attack on Zappos Retail Inc. that exposed sensitive data of thousands of customers (see story).

“The headlines are making consumers are nervous about whether their money and sensitive financial information they store on mobile phones will be kept safe,” Hannon says.

Given that consumers still place the most faith in their current banks, “financial institutions should begin crafting marketing campaigns to reassure consumers of their trustworthiness and also position themselves as the preferred provider of emerging mobile-payment technology,” Hannon advises.

“With a well-designed, focused marketing initiative, banks could identify existing customers with the highest propensity to utilize their mobile-payment services and market directly to these high-potential prospects,” she says, noting that smartphone users are “the most likely prospects to target.”

Moreover, that more consumers ranked PayPal as more trustworthy than other major payment networks is worth noting, Hannon says.

“We found it surprising that PayPal has jumped into the ranks of the major payment networks when it comes to trustworthiness among consumers,” she says. “This means that banks, which typically partner with Visa and MasterCard in their credit card businesses, will also have a further opportunity to consider working with PayPal as a trusted partner in the mobile payments space.”

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