US consumers may have switched on to mobile banking in droves, but the adoption rate for device-based payments continues to be dogged by security and privacy fears according to new data from the Federal reserve.
The survey of 706 financial institutions by the Federal Reserve Bank of Boston confirms the ubiquity of mobile banking, which is offered by 89% of respondents. Of those financial institutions tracking customer adoption, just over half now have more than 20% of their retail customers enrolled; and 44% have one-in-five actively using these services.
The figures for mobile payments adoption are more patchy, with just one-in-four currently providing payments services, although 44% plan to roll out an option within the next two years.
The stand-out security concern holding back roll-out by institutions is “inadequate customer security behavior,” with card-not-present fraud coming a close second.
Consumer uptake is also being dogged by security worries, as well as merchant acceptance issues. Usage data from banks in the study shows minimal take-up, with 81% reporting an enrollment rate of less than five percent of the customer base.
For these reasons, 80% of respondents to the survey believe industry-wide consumer adoption at the point-of-sale to be between three and five years away. Three-in-four anticipate a similar time-span for in-app and mobile Web usage.
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As a result, the horizon for mass adoption of mobile payments continues to recede. Among all 706 responding institutions, 80% said it will take anywhere from three to five years for the service to achieve “industrywide consumer adoption” at the point of sale. For in-app and mobile Web usage, 75% cite the same time span.
Some 211 institutions said they offer mobile payments, and of these 144 track enrollment, while 131 track usage. Eighty-one percent of those that track the matter report an enrollment rate of less than 5% of the customer base. Just 1% say the rate ranges from 35% to 50%. For usage, the percentages are the same.
According to the survey, implementation of mobile payment services is accelerating as financial institutions respond to competitive pressure and the industry momentum for mobile payments: in addition to the 24 percent already offering mobile payments, 40 percent plan to do so within two years. Additionally, more than two-thirds of respondents partner or plan to partner with third-party processors and more than half are considering a partnership with a near-field communication (NFC) wallet provider.
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