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Dissecting The Demand For Mobile Payments

A Snarketing post by Ron Shevlin, Director of Research at Cornerstone Advisors

In an article titled Consumers Show Cautious Interest In Mobile Payments, Payments Source reports on one study of US consumers’ views on mobile payments which found that:

  • Consumers are “clearly ready for a change,” as 27% of consumers “never” use checks.
  • One in three U.S. adults is interested in mobile and Near Field Communication-based payments.
  • 83% of respondents cited security as the most important factor affecting their interest in mobile payments.
  • 62% of respondents prefer financial institutions to take the lead on new payment methods instead of wireless or Internet companies.

My take: Concluding that consumers are “cautious” in their interest in mobile payments is a misinterpretation of the data.


First of all, concluding that, because one in four never uses checks, consumers are “ready for a change”  misses the point: Consumers have already changed. They’ve shifted their payments behavior away from checks to debit cards, and yes, cash.

The other points, however, all relate to something I’ve called the Blepfard Effect (don’t ask me how I came up with that name):

Asking people to imagine a situation, a state of mind, or something that they can’t possibly imagine because they have no basis of experience to do so.

When we ask consumers about something that doesn’t exist for them — which, for all intents and purposes, mobile payments applies — we don’t, and actually can’t, get a reliable picture of future behavior.

Few consumers are interested in Near Field Communication-based payments because to the Average Joe on the street NFC = National Football Conference.

Many consumers cite security as the most important factor affecting their interest in mobile payments because they have no idea what it is, how it works, and don’t know what other factors should or could be affecting their interest in mobile payments.

A majority of consumers prefer FIs to take the lead on new payment methods instead of wireless or Internet companies because they don’t know what “take the lead on new payment methods” mean.


Looking at the market for mobile payments as a whole misses something: The segment of consumers that I call Smartphonatics:

Consumers who change their shopping and payment behavior as a result of owning a smartphone.

Despite the proliferation of smartphones in the US, not everyone who owns one is a Smartphonatic (smart-fa-NAT-ic). But this group is growing, and their buying power is disproportionately higher than their numbers. They’re mostly young, and relatively affluent (for their age).

In a few weeks, Aite Group will publish a report on the The Global Rise of Smartphonatics: Driving Mobile Payment and Banking Adoption based on a study of consumers in 14 countries in the Americas, EMEA, and Asia/Pacific.

Two of the key points in the report:

Smartphonatic penetration varies by country, and represents its mobile maturity level. William Gibson once said that the future is already here, it’s just unevenly distributed. That describes the interest in mobile payments perfectly. The differences in the various countries’ Smartphonatic population is a reflection of the evolution of the mobile channel in each country — and not a reflection of innate differences in attitudes and behaviors of the country’s citizens.  

Demand for mobile payments isn’t “cautious.” There’s a segment of the population that is chomping at the bit to use mobile payments. And there’s a segment that couldn’t care less — for right now. There are early adopters and later adopters — but “cautious” isn’t an appropriate descriptor. 

Ron ShevlinRon Shevlin is Director of Research at Cornerstone Advisors. Get a copy of his best-selling book, Smarter Bank: Why Money Management is More Important Than Money Movement. And don't forget to follow him on Twitter at @rshevlin.

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  1. Another piece of research that tells us nothing. Security is always going to be a major concern for consumers when you present something new…you don’t need a survey to tell me that. There’s enough history…heck, the colonials, when surveyed, cited Security as the main factor affecting their interest in succeeding from Britain’s rule. And, please, if it weren’t for Wireless and Internet companies we would still be licking envelopes with checks and talking on pay phones.

    Sorry for the snarketing remarks, and by the way I love the Adriana Lima commercial at the end of your post. What exactly was that commercial about?…

  2. I hear where you’re coming from, Ron, but I think it may take more than just availability of mobile-based payment to move Americans away from the status quo. That’s because for the bulk of the populace, card-based technology is working just fine. Swiping a phone just doesn’t seem to be that much more convenient, and there are indeed costs associated with owning a smartphone that act as a mitigating factor to adoption. I personally believe that the benefits to retailers and marketers of speeding up the adoption of mobile-based payments will drive them to up the ante in terms of the rewards they give to smartphone-sporting consumers.

    Just another perspective…thanks for the ongoing articles and entertainment!

  3. AG: No argument from me on this. I didn’t mean to imply that the simple presence of the “supply” would be sufficient to drive demand. Believe it or not, I actually spend a fair amount of time editing my posts, and the original version started off w/ something that I ultimately edited out. Here it is:

    “In the 15 or so years that I’ve been doing consumer research in financial services, I’ve learned one thing: You usually can’t go wrong underestimating the rate of adoption of new technologies.
    There are three reasons for this:
    1. Infrastructure. Often, the right technology (e..g, PC ownership, broadband access, smartphone usage) needed to drive the adoption of a particular technology-based service isn’t fully in place.
    2. Fear. Many people have privacy and security concerns regarding technology. These concerns can be addressed, but ironically, technology-based solutions to technology-based concerns don’t work.
    3. Ingrained behavior. People who have done something one way for 20, 30, 40 years aren’t so quick to change — even if the new way is “better.”
    The financial services market research world seems to reflect this conservative approach to estimating demand for mobile payments.”

    The third point — ingrained behavior — speaks to the point you’re making.

    The key point of the blog post, though, is that to think of consumer demand for mobile payments as “cautious” is to miss the differences in demand that exist. The early adopters– the Smartphonatics — are eager and ready. The laggards shouldn’t fall into a single subset, either. Some will adopt the new technology faster than others.

  4. Great analysis.

    Here’s a side thought. I’ve often wondered how much the trackable nature of plastic and now smartphones plays into people’s decision making with money and payments? Finance nerds want to have all the data so they can slice and dice their own spending and budgeting.

    But, what about the people who prefer to remain anonymous with their spending? Obviously, those using money in a nefarious or illegal way won’t be adopting mobile payments, but what about the husband or wife who wants their weak “I-know-I’m-supposed-to-be-on-a-diet-but-I-had-to-have-that-Big-Mac” or “I-couldn’t-resist-that-fancy purse” moment to not show up on their shared statement? Pardon the stereotypes! Or the handyman doing work under the table? I would think that there is a significant segment of people that just want to have a wad of cash that leaves no detailed trail.

  5. Thanks for the response. I think that sums up — #3 in particular — what I was trying to say. And your point about Smartphonatics is a good reminder to we marketers in terms of how and where we might want to focus our promo and educational dollars. Thanks again, and I look forward to your next post!

  6. Tim:

    The Simplified Guide To Mobile Payment Adoption

    Do you have a Smartphone?
    IF NO -> LOSER!
    IF YES -> Do you care about the privacy of your transactions?

    IF NO -> Early adopter of mobile payments
    IF YES -> Are you married?

    IF NO -> Then why are you concerned about the privacy of your transactions? LOSER!
    IF YES -> Can you open a secret bank account your spouse doesn’t know about?

    IF NO -> You haven’t been married long, have you? LOSER!
    IF YES -> WTF are you waiting for? Open the account and start conducting mobile payments!

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