Poor Privacy and Mistrust Keep Mobile from Beating Cash

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Despite electronic payment innovations, cash is still the most efficient and simplest form of payment for low-value transactions.

But there are things the mobile payment industry can do to become more widely accepted, including improving consumer privacy and trust.

When it comes to mobile payment processing, experts also say a lack of standardization has prevented many retailers from adopting various technologies. This is the biggest issue currently facing mobile payment apps; you cannot count on using them and you do not know what system you will have access to.

So how will adoption occur? We may be following in Denmark’s steps, as this country is leading the global trend toward electronic money and may be the first to go completely cashless as early as 2016. Nearly 40% of the population use Danske Bank’s Mobile Pay, which allows money transfers between people as well as purchases in stores or online.

To introduce mobile payments as the standard form of payment, it must become a habit. According to a recent study by my company Fintonic, 44% of people in the US believe that mobile payments will become more common than card or cash transactions within the next year.

Though to do this you need to create sufficient repetitions in a brief period of time so that it becomes your first payment preference. By achieving repetition you also need mass adoption by merchants so that one payment app/technology can do the job. Once people learn about the technology, see others using it and get used to paying with it, usage will soar.

Security concerns are also one of the top roadblocks when it comes to mobile payment adoption. In fact, a December 2014 study by Walker Sands found that more than half of U.S. Internet users cited security concerns as one of the reasons that they were hesitant to use Apple Pay or other mobile payment services.

The increasingly high number of data breeches amongst retailers we’ve seen in the last couple of years causes fear amongst consumers who then become unlikely to trust mobile payment technology. According to an August 2015 study by ISACA, an independent and nonprofit global association of IT governance professionals, nearly nine in 10 respondents (87%) expected to see an increase in mobile payment data breaches over the next 12 months, and almost half indicated lost or stolen devices.

Trust is exactly what’s needed in order for mobile payments to encourage widespread adoption and overtake cash. Though we are many years away from that actually happening. According to that same study, cash was considered the most secure payment method by 89 percent of respondents, followed by credit cards (47%), money orders (46%), debit cards (42%), checks (37%) and lastly mobile payments (23%). However, we see with the excessive usage of credit cards that security doesn’t completely dictate usage. In fact almost half (41%) of respondents surveyed did not feel their credit card transactions were protected yet still use them anyway.

Privacy is an increasingly popular topic of conversation these days from advertisers having the ability to pinpoint every search you’ve ever made on the web to credit card companies keeping track of every swipe. Data and tracking have been around for a while, but with technology continuing to advance, consumers trust more and more companies with highly personal information. Cash does not come with any form of tracking or record keeping making all purchases and transactions completely anonymous.

Tech companies and retailers are convinced that consumers would rather wave their smartphones at a store register than pull out a debit card, credit card, or cash. However, according to, about 70 percent of shoppers will use cash over all else to pay for holiday purchases. We may begin seeing major players taking large parts of the market, but for now, there is too much fragmentation for mobile payments to replace cash or even credit and debit cards.

Sergio Chalbaud is CEO and Founder of Fintonic

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