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We are still at the start of Mobile Payments

09 January 2017

We are still at the start of Mobile Payments

Ellie Fixter,
Senior Content & PR Manager,

Chloe James (RFI Group) speaks to Paul Stoddart, Deputy CEO - VocaLink.


In your recent US Millennials Report - What does VocaLink’s research reveal?

As the providers of the infrastructure through which so much of business and personal commerce is conducted, VocaLink has unique access to information which can provide an insight into emerging trends and behaviours when it comes to how individuals and businesses move their money. We conduct a great deal of work around the future of digital payments (whether that be mobile payments or mobile banking), and millennials are the age group most active in this space. The VocaLink global research, “The Millennial Influence”, shows us how millennials think about their money: how they want to pay for goods and services, how they access and move their money and what they envisage the future of payments to look like.

One of the most interesting findings in both the United States and Europe is that the greatest trend is the desire amongst millennials to use mobile payments technology if its security is guaranteed by their bank and, alongside this, real-time information on their banking via a mobile app. One in 4 millennials have actually already tried mobile payments but have since lapsed, mainly down to security concerns.


How many people participated in the survey?

We surveyed around 9,000 millennials across Europe and the United States.


Do you think electronic mobile payment technology will become mainstream and if so by when?

Over half of the US millennials surveyed currently make mobile payments and they are keen to adopt mobile payments technology but have a number of concerns hindering their uptake. They are sceptical about current security levels and feel the technology needs the support and guarantee of their bank before they will adopt the systems.

Whilst we think that mobile payment technology is set to become ubiquitous, timelines remain unclear. Our research reveals that 40% of US millennials surveyed were using an iPhone 6 or newer model, however, only 8% of them said they were spending via Apple Pay. It suggests that the means of paying digitally are available, but it is people’s attitudes and perceptions to digital payments which haven’t caught up.

Surprisingly, 22% of millennials haven’t even tried using mobile payments. This is potentially a huge market for payments providers to tap into relatively easily by improving their offer and user experience.


How many US millennials are already using mobile technology to make payments? How does this compare to Europe?

The US is leading the field, with 52% of the millennials surveyed currently using mobile payments. In Europe, the rates are lower, with only 25% of millennials in the UK and 21% of millennials in Germany engaging with digital payment technology. Of the millennials surveyed in The Netherlands and Italy, this jumps to 36% and 37% respectively.

These variations are partly caused by different mobile technologies available in each country, for example in the US, Venmo is a very popular mobile payments app, however this is not available in the UK.

The global third-party mobile payment technologies such as Apple Pay and Samsung Pay have universally struggled with pick-up: only 8% respectively in the US, while in the UK Apple Pay users drops to 2%.


Do millennials have any concerns about using mobile technology to make payments?

Across Europe and in the United States, millennials are concerned about security when using a third-party app for mobile payments, specifically when it comes to their data. Worries included how secure their mobile network was and the chance that their financial data could be hacked or lost on their cell phones.

In order to feel more secure, 70% of US millennials would be more likely to use a new mobile payment service if it was provided by their own bank, as the payment and technology would be guaranteed by them.

It is important to note that concerns over security most affect the adoption rate of mobile payments. Those millennials who do regularly make mobile payments had significantly less apprehensions.



"Despite the fanfare, we are still at the start of the mobile payments revolution. The next step will be from the banks, not only by getting more hands on in the mobile payments world, but also the move to an open API."

Paul Stoddart



Are there additional features that mobile payment technology providers could offer to overcome the concerns around safety and security?

VocaLink are currently working with four of the UK’s top banks to deliver ‘Pay by Bank app’ that will make paying with your mobile safe, secure and convenient. It allows individuals to make instant payments from within their existing trusted mobile banking app, straight from their account, without their personal information ever leaving their bank.


What other methods of payment do you think millennials will be using in the future?

Millennials on both side of the Atlantic are in favour of using biometrics - thumbprints, eyeball scanning and face recognition, are all either currently being used, or will become increasingly more popular as security measures for their mobile banking and mobile payments. Biometrics are seen as preferable to a pin number or signature: 58% of people surveyed in the US would prefer to use eye scans instead of signature or PIN and 67% would prefer to use their fingerprint instead of a signature or PIN.


What’s the next step for mobile payments?

Despite the fanfare, we are still at the start of the mobile payments revolution. The next step will be from the banks, not only by getting more hands on in the mobile payments world, but also the move to an open API. An openAPI will remove any information barriers for challenger banks and third party mobile payments apps, enabling them to lead the technology charge and push the industry forward.

Our research showed that in spite of its already simple nature, US millennials would like an even more effortless mobile banking solution. For example, 78% said that they would like to see that they have enough money in their account before making a purchase and 73% would like the ability to make instant payments to both individuals and businesses regardless of who they bank with.


Do you think there is a chance that cash payments will become redundant and mobile payments will take over?

Although the popularity of mobile payments is growing and that of cash is waning, there’s still one area where cash is king. When paying their friends and family, US millennials still prefer to pay in cash with 48% using this method.

At present, cards are leading the way in other areas, especially since the advent of contactless payments, however, e-commerce is firmly in the sights of mobile payments, with online shifting to mobile in both commerce and banking.

In terms of mobile banking, millennials are already using banking apps over internet banking and mobile commerce is ever increasing, as tablets continue to take computing market share from laptops and desktop computers.

For the time being, new and traditional payments methods are being used simultaneously, however, it seems that millennials are just biding their time until they are provided with a mobile payment technology, that is secure, convenient and reliable, with a preference for it being from their bank. Until then, they are loyal to traditional and trusted payment methods.



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