Dec. 26, 2011
Although several major retailers from Gap to Toys R Us are partnering with banks, payment processors and Google to allow shoppers to pay via smartphones, the payment method won't take off for at least another couple of years, according to a KPMG study released last week.
It found that only 23 percent of consumers were willing to use their mobile phones in place of other forms of payment.
One major obstacle to universal adoption, according to the report, is doubt among consumers and companies that it's more secure and easier than using a credit or debit card or cash. Of the 970 companies surveyed, 71 percent said they believed they must overcome security concerns to succeed in mobile payments.
"Just the act of paying with your phone is a new thing for most of us. We're also working hard to educate people about why mobile payments represent the future of commerce," Marc Freed-Finnegan Sr., business product manager of Google Wallet, said in a story on Reuters.
Another hurdle to development is the availability of contactless payment machines and installation costs for retailers. Only about 500,000 NFC readers (contactless payment machines) have been installed at retailers' point-of-sale locations in the United States.
Research firm Aite Group, however, expects the pay-by-phone transactions to total $2.1 billion in 2012 and $22.6 billion by 2015. It will take time, according to Thomas Kunz, senior vice president at PNC Financial, who pointed out that there are 11 million merchants in the United States, and nobody's being paid to make the change.
"Using a phone instead of a card is not such a big deal, at least right now," he said in the story.
Read more about consumer behavior.