M-payments overhyped? Banks remain most trusted provider

Publication of the annual World Payments Report is among the highlights of the consumer finance reporting calendar. The 2013 report, the ninth such annual report published by CapGemini and sponsored by Royal Bank of Scotland does not disappoint writes Douglas Blakey.

Publication of the annual World Payments Report is among the highlights of the consumer finance reporting calendar. The 2013 report, the ninth such annual report published by CapGemini and sponsored by Royal Bank of Scotland does not disappoint, writes Douglas Blakey.

The use of cards (debit and credit) further accelerated during the past year with debit card volumes rising 15.8% to a total of 124bn and credit cards climbing 12.3% to a total of 57bn.

The growing popularity of e-commerce also helped accelerate the figures for non-cash payments.

Three forces are helping drive growth in mobile and electronic payments transactions: increased penetration of smart phones and internet usage, advances in technology, and innovative products and services.

This growth is making the area an attractive one for banks and non-banks.

There are however strong grounds for argument that the industry is over-hyping the rate of growth about global m-payments volumes.

This is backed up by research to be released in mid-October by Timetric.

The Timetric foresight report, ‘Consumer Centric Payment Innovations’ concludes that, despite the hype, mobile payments is still some way off from being a serious challenger for cash and card payments.

Taking into account current knowledge of market drivers, the global value of mobile payments will triple from $311bn billion in 2013 to $1.1 billion in 2017, representing a rise from less than 1% to 3% of the world card payments. According to by colleague, Timetric analyst, Vladimir Vukicevic, mobile payment is still waiting for a game changer, like the iPhone was for smart phones.

While it has taken many decades for financial service providers around the world to build a huge pool of payment cards, it may now take much less time for cards to be replaced with other means of payments including mobile payments’ says Vladimir Vukicevic.

Might mobile wallets gain traction and play an increasingly important role?

There are some fascinating stats offering conflicting evidence in this area, depending on the markets surveyed.

It seems that a majority of UK consumers would use mobile wallets, according to recent research carried out by electronic transactions consultancy Consult Hyperion.

This 58% figure in favour is in contrast with the 64% of US consumers who say they would never use a mobile wallet.

One fact that does remain consistent and that is trust.

When asked who they would trust most to issue a mobile wallet: banks, phone companies, Google or major retailers, banks came out top of the polls by a distance.

The most trusted issuers for UK consumers were banks at 34%, followed by Google at 14%, mobile operators at 6% and retailers at 4%.

In the US, banks ranked first at 20%, followed by Google at 10%, retailers at 3% and phone service providers at 2%.