More consumers are using smartphones to pay bills and conduct other financial transactions, but a good portion worried about security are staying away, suggests a March 14 Federal Reserve Board study of mobile banking and mobile payments.
For the Fed’s “Consumers and Mobile Financial Services” report, Knowledge Networks conducted an online survey of 2,290 U.S adults between Dec. 22 and Jan. 9.
Through the research, the Fed found that 87% of the U.S. population older than 18 has a mobile phone, and 44% of those are smartphones.
Some 21% of smartphone owners within the previous 12 months used their device for mobile banking, and 12% used it to make a payment, the report found. The Fed defines a mobile payment as purchases, bill payments, charitable donations or funds transfers to another person.
Among the respondents who used their smartphone to make a payment, 47% paid a bill online; 36% made an online purchase and 21% transferred funds to another person’s bank, credit card or PayPal account.
Fewer than 10% of respondents used their smartphone for other types of mobile transactions, such as receiving a payment or texting to make a charitable donation, according to the report.
Younger consumers are more likely to make mobile payments with smartphones, the data suggest. Thirty-seven percent of respondents ages 18 to 29 said they had made a mobile payment compared with 22% of all respondents.
Among the “underbanked,” which the Fed defines as individuals who may have a bank account but use alternative financial services for check-cashing, 29% of respondents said that within the last 12 months they have used mobile banking services and 12% said they have made a mobile payment.
Women are also slightly more likely to use mobile payments, with females accounting for 55% of all mobile payments, the survey data suggest.
Income and education did not factor in different groups’ use of mobile payments, according to the report.
The majority, or 66%, of respondents used a credit, debit or prepaid card to make a mobile payment, while 45% made payments directly from a bank account and 22% used Google Wallet, PayPal or iTunes. Eight percent routed a payment to their mobile phone bill.
Fewer than 7% of respondents used their smartphone to make more than five payments per month, the data suggest.
Although 58% of respondents used the Internet to price-compare before making purchases, only 12% of mobile-phone users said they had used a barcode-scanning application for price comparisons. Some 16% of respondents said they used their mobile phone to browse online-shopping reviews while in stores.
More than half of respondents said the reason they had not adopted mobile banking is because “their banking needs were met without the use of mobile banking.”
Forty-two percent of respondents cited security concerns as the reason they had not adopted mobile banking.
The Fed predicts that mobile banking will continue to grow, with one in three smartphone users adopting it by early 2013. “Similarly, a significant fraction of mobile phone users appears to be interested in using phones to make mobile payments,” the report notes.
Consumers' perception that mobile banking and mobile payments are not secure is one of the primary impediments to adoption. If consumers' perception of security issues changes–whether due to actual or perceived improvements–adoption rates may significantly increase, the Fed said.
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