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Consumers prefer PayPal mobile wallet over Google, Apple: report

June 5, 2012

Consumers are considering alternative providers for mobile payments

Of the consumers who are interested in mobile wallets, more would consider using PayPal as their primary provider over Google or Apple, according to a new report from Carlisle & Gallagher Consulting Group.

Consumers are increasingly interested in mobile wallets and many would consider using alternative players as their primary provider, showing that banks are at risk of losing market share. According to the report, eight in 10 would use PayPal as their mobile wallet provider while only six in 10 would use Google or Apple.

“We believe the competitive threat to banks from alternative payment providers is real,” said Peter Olynick, card and payments practice leader at Carlisle & Gallagher, Charlotte, NC.

“I think all of the banks recognize that they will need to move faster in the future than they have in the past in order to maintain their base of customers so they don’t lose customers to more of these alterative providers and so that they have some ability to gain market share as people migrate to mobile payments,” he said.

“There are a lot of people trying to blend the right combination of features and functionality that is attractive. Banks are trying to do this and non-traditional competitors are also doing it – we will see who has the best combination.”

Youth, affluence drive use
The online survey of 605 consumers, which took place in April, found that 48 percent of respondents are interested in a mobile wallet. Interest in mobile wallets is driven both by young consumers and affluent consumers.

Of those who are interested in mobile wallets, 76 percent are currently using or intend to use mobile banking today.

According to the report, these consumers can be divided into two groups: Techno Shoppers and Payment Optimizers.

Techno Shoppers represent 27 percent of those currently using mobile banking consumers and are attracted to the shopping and social features of mobile wallets.

Within the Techno Shoppers group, five in ten would prefer to use PayPal over their primary bank as their mobile wallet provider while three in ten would prefer Google and two in ten would prefer Apple.

Payment Optimizers, or 21 percent of mobile bankers, are consumers who are interested in making the best payment decisions based on their financial situation, loyalty benefits and account management.

Not only are consumers interested in alternative payments providers for mobile wallet services but they would also consider these providers for more basic banking services if they were offered.

The report found that eight in ten would consider using PayPal if it offered banking while six in ten would consider using Google or Apple.

Managing offers
Carlisle & Gallagher forecasts that within five years, half of today’s smartphone users will be using their phones and mobile wallets as their preferred method for payments, pointing to the need for banks to consider ways to keep their products top of mind for consumers.

Consumers also expressed a strong interest in using a wide variety of services in their mobile wallet such as search and shop, loyalty programs and real-time incentives.

One of the attractions of mobile wallets for consumers is that they can provide a way to manage the number of offers consumers receive. The report found that the top frustrations for consumers are the inability to manage offers and incentives as well as keeping track of payment due dates.

Other findings include that 65 percent of respondents said the most valued mobile wallet services is the ability to make better payment choices. Additionally, 82 percent of Techno Shoppers said that making shopping easier was very valuable while 62 percent said mobile wallets make shopping more fun.

While mobile payments have been on the horizon for some time, there is an increased sense of urgency on the part of banks and other providers that mobile payments at scale is quickly getting closer and they need to act, per Mr. Olynick.

“You are seeing a lot more belief that NFC might not be the only answer,” Mr. Olynick said. “Banks realize there may be other technologies that may be more easily implemented and therefore are going to allow merchants to accept mobile payments faster than having to get a new piece of hardware to support NFC.

“I think that the banks recognize that they need to make some announcements if they are going to be competitive in this space,” he said.

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