mobile payment index study

Private & Confidential

© eDigitalResearch 2012

For informed direction



Mobile Payment Index

May 2012



eDigitalResearch Mobile Payment Index

Mobile Payment Index New quarterly eDigitalResearch study looking at the uptake and general consumer perceptions of mobile payments and NFC

2



eDigitalResearch

The explosive uptake of smartphone devices and mCommerce by consumers has been hard to miss, changing forever the way in which we browse, buy and communicate. The introduction of NFC technology and contactless mobile payments are likely to change all of this again and revolutionarise the way in which we perceive our mobile devices. The essential mental check list of ‘keys, wallet, phone’ every time you leave the house will soon be a thing of the past. eDigitalResearch have been tracking the development of mCommerce since October 2009 when the channel was still in its infancy. Like the Internet, we’ve watched mobile become a customer touch point in it’s entirety, driven completely by consumer demand. 2012 has been dubbed by many as the ‘Year of NFC’ when industry experts feel that everything will align and contactless mobile payments will become a major part of our high street shopping experience. With that in mind, eDigitalResearch have begun surveying consumer behaviour and attitudes towards the technology, benchmarking results quarterly and tracking changing trends. Unlike mCommerce, with mobile payments, it will be retailers, technology providers, handset manufacturers and banks who will be driving the change. Without access to the technology, consumers will be unable to use contactless mobile payments. This study, the first of it’s kind, looks to understand current consumer thinking towards contactless mobile payments and covers consumer demand to the barriers that currently stand in the way of widespread adoption.

Mobile Payment Index: Introduction

3



eDigitalResearch

A survey was sent to a consumer panel between the 13th and 18th March 2012. 2,078 responses were collected in total: 1,068 were completed by smartphone owners and 1,017 were completed by non-smartphone owners. The survey covered all areas surrounding contactless mobile payments, including:

Awareness Previous use, early adopters and satisfaction Future use Perceived benefits and limitations Improvements and Regulation

The survey also looked at consumer perceptions surrounding the use of contactless mobile payment around the Olympic Games, as well as mobile apps designed specifically to make mobile payments to individuals. eDigitalResearch will continue to run the Mobile Payment Index on a quarterly basis, in order to help companies and organisations better understand contactless mobile payment use, track developments, and plan for the future. This is the first study of it’s kind.

Methodology

4



Mobile Payment Index results

5



eDigitalResearch Mobile Payment Index: Key Findings

Mobile payments are likely to increase over the next year, especially amongst smartphone owners

6

General consumer awareness of contactless mobile payments is still relatively low. Retailers, handset manufactures, network providers and banks will all need to work together to improve this.

Results show that early adopters are predominately young males.

Satisfaction amongst early adopters is very high, suggesting that once used, consumers are likely to want to use it again.

Security is the one, fundamental concern surrounding contactless mobile payments. Providers will need to work together to help increase consumer trust.

Consumers are most likely to use contactless mobile payments at supermarkets, fast-food outlets, cafes, and public transport links, places where queuing times can often exceed customer expectations.

Almost half (44%) of those that already have the technology enabled on their smartphone devices have already used contactless mobile payments to make a purchase.



eDigitalResearch

Security remains a key concern for consumers, and unless more can be done to reassure potential contactless mobile payment users, is likely to dampen the growth of NFC technology in the UK. Whilst the introduction of payment apps and other mobile enabled payment devices is helping to build consumer awareness, the media glare on security and other certain risks is helping to prevent widespread consumer adoption. In order for the UK to achieve the sort of NFC and contactless mobile payment growth predicted in 2012, it is essential that payment providers, retailers, banks and mobile manufacturers work together to put into place the following three essential key features:

Consumer awareness: build the public’s knowledge and address security concerns. Retailer adoption: greater awareness will build as more and more retailers encourage their customers to use the technology. Access to technology: contactless mobile payments are currently only available to a select few due to the limited number of NFC enabled handsets available on the market.

Conclusions

7



eDigitalResearch eDigitalResearch Contactless Mobile Payment: Awareness

17%

36%

15%

33%

Yes, completely Yes, partly No, but I have heard of it No, never heard of it

Before this survey, were you aware of what Contactless Mobile Payments were?

67% of survey respondents have heard of Contactless Mobile Payments before, yet only 17% of people are ‘completely aware’ of what it is.

8

n=2,078



eDigitalResearch eDigitalResearch Contactless Payment: Awareness

15%

61%

24%

Have you seen any Contactless Mobile Payment Points or symbols before?

Of the 2,000 consumers surveyed, 61% haven’t seen contactless mobile payment points before, whilst just 15% claim that they have. Of that 15%, 29% live in London or the South East.

9

n=2,016



eDigitalResearch eDigitalResearch Contactless Mobile Payment: Awareness

0% 2% 4% 6% 8% 10% 12%

Other

Soft good retailers

Entertainment venues

Hard good retailers

Smaller retailers

Department stores

Restaurants

Cafes/cofee shops

Public transport links

Fast-food outlets

Supermarkets

Are you aware of any of the following types of goods or service providers that have Contactless Mobile Payment points?

Awareness of contactless mobile payment points mirrors those brands and retailers who are already investing in the technology, such as supermarkets, fast food outlets and coffee chains like Starbucks.

10

n=2016



eDigitalResearch eDigitalResearch Mobile Wallets: Awareness

7%

20% 19%

54%

Yes, completely Yes, partly No, but I have heard of it No, never heard of it

Before this survey, were you aware of what Mobile Wallets and/or Mobile Wallet payments were?

11

Awareness of mobile wallets is considerably lower than contactless mobile payments. Just one third (33%) of those surveyed have never heard of contactless mobile payments, whilst over half (54%) have no previous knowledge of mobile wallets whatsoever.

n=2,016



eDigitalResearch eDigitalResearch Mobile Wallets: Awareness

6%

20%

74%

Yes, completely Yes, partly No

Do you know how to use a Mobile Wallet to pay for goods or services?

12

Consumer knowledge surrounding the use of mobile wallet technology is particularly limited. Respondents seemed very unconfident on how to actually use it to pay for goods and services and is something that all parties (retailers, technology providers and banks) will need to work on together to improve.

n=2,016



eDigitalResearch eDigitalResearch Contactless Mobile Payments

4%

64%

32%

Yes No Don't know

Do you have a Mobile Wallet on your handset, or the ability to make Contactless Mobile Payments via your phone?

13

Of those respondents who own a smartphone, just 4% have NFC technology available on their handset. One third (32%) of smartphone owners are unsure, reflecting the considerable amount of confusion surrounding the technology and reaffirms the need to increase awareness around contactless mobile payments.

n=1,904



eDigitalResearch eDigitalResearch

14

47% 47%

6%

Yes No Not sure

Have you used your phone to make a payment before, using Contactless Mobile Payment Point?

n=79

Contactless Mobile Payment use

Of the small percentage that do have NFC enabled handsets, an encouraging 47% have already used the technology to make a purchase.



eDigitalResearch eDigitalResearch Early Adopters

68%

32%

Male Female

13%

48%

31%

8%

18-24 25-34 35-44 45-54

Results show that the majority of early adopters of contactless mobile technology are young males aged between 25-34.

15

n=79



eDigitalResearch eDigitalResearch Contactless Mobile Payments: Previous use

0% 10% 20% 30% 40% 50% 60%

None of the above


Cafes / Coffee shops


Smaller retailers

Hard goods retailers

Soft goods retailers

Fast-food outlets

Department stores

Resaurants

Supermarkets

Where have you used Contactless Mobile Payments?

16

n=37

Over half (53%) of those that have already made a contactless mobile payment, have done so at a supermarket. Interestingly, more consumers have used the technology in more traditional retail settings than fast food outlets and cafés, despite these brands having invested more in NFC systems.



eDigitalResearch eDigitalResearch Contactless Mobile Payment: Previous use

54%

59%

27%

14%

3%

Small purchases e.g.sandwiches

Medium purchases e.g.books, CDs, DVDs

Big purchases e.g.weekly food shop

High-end purchasese.g. holidays

Don’t know

5%

11%

17%

25%

22%

8%

6% 6%

Less than £5

£5-£10

£11-£20

£21-£50

£51-£80

£81-£100

£101-£200

More than £200

Of those survey respondents that have used Contactless Mobile Payments to make a purchase, the majority have used the technology to purchase small to medium items and on average spending £6.76 per purchase.

17

n=37

n=37



eDigitalResearch eDigitalResearch Future use

62%

24%

11%

3% 0%

Very likely Quite likely Not sure Quite unlikely Very unlikely

How likely are you to use it again?

62% of previous contactless mobile payment users said that they were ‘Very likely’ to use the technology again, whilst an additional 24% said they were ‘Quite likely’, suggesting that satisfaction with the technology is very high overall.

18

n=37




0% 0% 0% 0%

3% 3%

16%

14%

22%

19%

24%

0 1 2 3 4 5 6 7 8 9 10

How satisfied are you with using Contactless Mobile Payment Points to make a payment?

Satisfaction amongst previous users of the technology is extremely high. 43% rate the technology extremely highly, giving a score of 9 or above. This suggests that users are likely to use the technology again, reaffirming the significance of increasing consumer awareness and confidence surrounding contactless mobile payments to encourage more first time users.

Contactless Mobile Payment: Satisfaction

19

n=37



eDigitalResearch eDigitalResearch Contactless Mobile Payment: Future use

6%

12%

34%

9%

38%


How likely are you to use contactless mobile payments in the next one year?

18% of smartphone owners are either ‘Very likely’ or ‘Quite likely’ to use contactless mobile payment within the next year, whilst an additional 34% are not sure - most likely due to the fact that they currently do not have the technology available on their smartphone devices and are unsure of when this functionality will be rolled out on more handsets. It’s important, however, that mobile firms, technology providers and retailers work to increase consumer awareness and convert this segment of consumers into contactless mobile payment users.

20

n=1,979




21

Future use

24% of early adopters said that the maximum they would be willing spend using contactless mobile payments was between £11-£20, whilst an additional 22.8% said that they would not be willing to spend above £50.

Of those that said that they would be either ‘Very likely’ or ‘Quite likely’ to use contactless mobile payments within the next year, 29% are males aged between 25-34, whilst 32% are females within the same age range.

4%

29%

23%

21%

16%

7%

Male

18-24 25-34 35-44 45-54 55-64 65+

10%

32%

25%

18%

10% 5%

Female

18-24 25-34 35-44 45-54 55-64 65+




0% 10% 20% 30% 40% 50% 60% 70% 80%

None of the above

Hard goods retailers

Soft goods retailers

Smaller retailers

Department stores


Cafes / Coffee shops


Fast-food outlets

Resaurants

Supermarkets

Where would you use Contactless Mobile Payments?

22

Future users would be most likely to use the technology at supermarkets, fast food outlets, café’s and public transport links, where waiting can traditionally take up a considerable amount of time, and where consumers feel that they would see the greatest benefit.

n=368




58%

35%

28%

22%

29%

13%

21%

14% 15%

23%

Happy withhow I pay atthe moment

Concernsabout

security/fraud

Have noreason to use

it

I'm notinterested in it

Unsure howthe

technologyworks

Limited placesI can use it

The Ihave/want

doesn't allowcontactlss

mobilepayments

Unsure ofwhich phones

allowcontactless

mobilepayment

Don't wantthat

technologyenabled onmy phone

Not likely toget a newphone that

allowscontactless

mobilepayment

Why are you unlikely to use Contactless Mobile Payments in the near future?

A lack of information and understanding, as well as concerns over security are major factors stopping consumers from using the technology in the foreseeable future. Other barriers include a lack of knowledge when it comes to NFC enabled handsets.

23

n=1,616



eDigitalResearch eDigitalResearch Perceived Benefits

32%

29% 29%

15%

9%

6% 6%

17%

22%

4%

15%

3%

32%

Convenientto pay with

mobile

Easier topay withmobile

than takingcash/cardswith me

Quick topay withmobile

No paperreceipts so

lesschange of

losingpersonal

info

Better ableto keeptrack of

how muchI am

spending

It's safeand secure

Less likelyto

encounterfraud

It uses thelatest

technology

It ismovingforwardwith thetimes

There arelots of

paypointsaround

Thetechnology

isavailable,

so why not

Other I don'tthink there

are anybenefits

What do you think are the benefits of using Contactless Mobile Payments to make a purchase?

Ease and convenience are seen as the main consumer benefits of contactless mobile payments. Worryingly, almost one third (32%) don’t see any benefits whatsoever. However, 56% of these are non smartphone owners and are therefore unlikely to have access to the technology in the near future.

24

n=2,016



eDigitalResearch eDigitalResearch Perceived Limitations

22%

29%

13%

34%

23%

51%

38%

7%

23%

28%

31%

4% 7%

Can only beused for certain

purchases

Not needed,can pay using

cash/cards

There is amaximumspend limit

Moresusceptible to

technical issues

Hard to keeptrack of howmuch I am

spending

Concerns oversecurity

More open tofraud

Tootechnologically

advanced

Not much clarityon how much to

pay/how it

works

Not enough paypoints around

Technology notavailable on all

phones

Other There are nolimitations

What do you see as the limitations of using Contactless Mobile Payments to make purchases?

25

Security and fraud are currently the biggest barriers to widespread adoption, as well as concerns over technical issues. However, as retailers, providers and manufacturers work together to improve consumer knowledge and access, we would expect the amount of people concerned about how the technology works, access to pay points and NFC enabled handsets to decrease over the course of the coming months.

n=2,016



eDigitalResearch eDigitalResearch Contactless Mobile Payments: Regulation

19%

40% 38%

35%

15%

34%

16%

21%

7% 10%

21%

0%

19%

1%

Who do you think should be responsible for regulating mobile payment technology?

26

Of the 2,000 consumers surveyed, 40% of consumers feel that regulation responsibilities should fall to mobile phone networks, whilst 35% feel that banks should take up the mantel. Only 15% feel that the responsibility should lie with handset manufacturers and suggests that if banks and mobile networks work together to increase consumer trust, they are likely to make the biggest strides.

n=2,016



eDigitalResearch eDigitalResearch Contactless Mobile Payments: Improvements

We asked all 2,000 survey respondents what improvements they think need to be made to Contactless Mobile Payments.

Better/Tighter security: 22.8% of respondents do not feel confident enough that

there is enough security surrounding Contactless Mobile Payments

More information: 10.34% of consumers feel that more information is needed to

help increase awareness. Similarly, an additional 6.9% felt that they didn’t have enough information on Contactless Mobile Payments to make a comment within the survey, reaffirming the importance of increasing awareness.

More pay points: 8.75% of respondents felt that the lack of available places where

they could use Contactless Mobile Payments was holding back the technology. To improve, retailers and technology providers need to look at integrating more pay points around stores, as well as branching out to all locations.

Technology available across all mobile devices: 1.3% of respondents wanted to

start using the technology yet couldn’t because NFC technology is only available to a select number of mobile users. We would expect this figure to drop though as more and more popular

makes and models include the technology.

27




28

Mobile Payment Apps

After the introduction of Barclay’s Pingit app, we decided to ask consumers what their views and opinions were on this type of technology and how possible widespread adoption is likely to be.

6%

12%

34%

9%

38%


How likely would you be to use an app like Pingit to make payments if your bank introduced the same technology?

75%

41%

16% 23%

13% 20%

16% 12% 11%

1%

Never heardof it

Not aBarclayscustomer

Phone notcompatible

Happy withhow I pay atthe moment

Concernsabout

security/fraud

Had noreason to use

it

I'm notinterested in

it

Unsure ofhow the

technologyworks

Don't knowanyone else I

can use itwith

Other

Why have you not used the Barclays Pingit app?

n=1,632

n=1,969




29

Mobile Payment Apps

31%

15%

55%

More likely to trust it Less likely to trust it Doesn't make a difference

Are you more or less likely to trust this method of payment if it is being endorsed by banks?

Again, general consumer awareness surrounding this type of technology is very low, with 75% of those surveyed claiming that they had never heard of the app. However, there appears to be a lot more trust of this type of technology when compared to contactless mobile payments, with just 13% of the 2,000 surveyed claiming that they had concerns over security and fraud. Almost 1 in 5 (18%) said that they were likely to use the technology if their banks introduced a similar app, whilst an additional 34% are not sure, suggesting that if more information is provided to consumers, then uptake may be higher.

n=2,016



About eDigitalResearch

30



eDigitalResearch eDigitalResearch eDigitalResearch mobile insight solutions

31

App mCommerce In store QR

codes

Mobile detection technology Automatically detects when a user is accessing a survey through a PC or mobile device (smartphone and tablet) and serves them either a standard or mobile enabled survey

Currently tracking around 10% (+100% yoy) survey completes from a mobile or tablet device for all eDigitalResearch surveys

‘Younger fashion’ most popular sector for completing surveys on mobile




32

Mobile Marketing Research Association

eDigitalResearch are very proud to be a Founding Member of the MMRA

eDigitalResearch, along with other members, will be working alongside the MMRA to develop and promote professional standards and ethics in mobile market research.

eDigitalResearch’s mobile studies include: • Tracking rise of mCommerce with consumers

since October 2009 • Benchmarking emerging mobile retail sites

since August 2010 • Benchmarking mobile retail Apps since April

2010 • Comparing cross channel consumer experience

across eChannel’s since December 2011


© eDigitalResearch 2012 33

Who we are and what we do eDigitalResearch

Company Partners

We are migrating traditional market research to digital methodologies • reducing costs – fixed pricing model • faster results – real time results • improving accuracy – no response or panel limits

We are developing and introducing innovative research solutions • social networking (digital communities) • maximising respondent engagement • industry norms/benchmarking • mCommerce/mResearch

We are one of the leading providers of digital market research • established in 1999 by current directors/owners • self funded, financially secure, clear ethics • own system with outstanding technical support • team of research professionals



Product Overview eDigitalResearch

• ‘Closed group’ research • Usability &

‘end to end’ experience • Benchmarking

eMysteryShopper

Verbatim Coding

• Automated qual-to-quant text analysis •Full reporting of

verbatim comments across any digital

medium

• ‘Open’ user research • Visitor/user opinion • Key performance

indicators • Brand advocacy

eDigitalSurvey

• Omnibus research • Client panel management • Media panels

ePanelManager

• Web 2.0 • 3 way dialogue from

profiled users • Product ratings

• Net chats

eDigitalCommunity

HUB Insight and

Analysis



Vanbrugh House, Grange Drive

Hedge End

Hampshire SO30 2AF

Tel: 01489 772920

www.edigitalresearch.com

@eDRtweet

eDigitalResearch

Key Contacts:

Lisa Bonczyk – Associate Director, Sales and Marketing–[email protected]

Liana Vickery – Marketing Executive - [email protected]

35

For a bespoke research programme designed specifically to gain insight and understanding into your mobile audiences, please

contact Lynda Baker, Business Development Manager at

[email protected] Similarly, if you would like more information on the results then

please contact eDigitalResearch by emailing [email protected]

http://www.edigitalresearch.com/

mailto:[email protected]


