|A full migration to mobile payment offerings seems to be still a few years away.|
Mobile banking may sound awesome in theory, but research from Javelin Strategy & Research found that a very small percentage of consumers (12%) actually use their phones to make contactless payments. "They don't see the benefit," says Mary Monahan, research director of mobile for Javelin. She explains that some banks are starting to do a better job of illustrating what mobile banking affords consumers, citing Chase's commercial that features newlyweds cashing checks while on their honeymoon as one example. But more financial institutions will need to make a similar advertising push to get reluctant consumers on the mobile payment bandwagon. "You're trying to change 30 years of behavior," says Calvin Grimes, product manager of mobile solutions for electronic commerce system provider Fiserv. "In order to do that, you have to give
Unfortunately, research also shows that a majority of consumers aren't sold on the security of digital commerce platforms. According to Javelin's research, 44% of consumers say they stay away from mobile banking because of safety concerns. As such, "the offerings being shown to consumers need to be as secure or even more secure" than traditional payment methods, Monahan says, to change the public's perception. ( Google ( GOOG) Wallet's hack earlier this month probably did little to quell those fears.) Additionally, Grimes cites research that consumers want to get mobile banking services directly from their financial institutions, instead of having to sign up for a service they aren't already a part of -- a desire that bucks the current trend. "They want to stay with known brands and known networks," he says. The technology may exist, but a majority of consumers don't have it yet.
A majority of consumers don't own a smartphone or other mobile device with an NFC chip, the mobile equivalent of a credit or debit card's magnetic strip that's actually more secure since the codes associated with them change periodically. Grimes says this could change easily, if, for instance, Apple ( AAPL) decided to add such chips to the next iPhone model, but until then there's a gap that will stand in the way of widespread adoption. He says to expect a surge in person-to-person payment options that will precede mass migration to a full-on digital wallet. "That time is going to come," he said. "Financial institutions need to think about it more strategically." >To submit a news tip, email: email@example.com. Follow TheStreet on Twitter and become a fan on Facebook.