Mobile Payments: The Future is Here, just not Evenly Distributed

If you have made a payment at retail with your smartphone and are anything like me, you’ll feel this is the future of payments. But as the famous quote from William Gibson says, “the future is here. It is just not evenly distributed.” After conducting some research in the US, UK, and Australia, it would be hard to find a more appropriate phrase for mobile contactless payments.

Last fall, the United States went through a drastic disturbance in consumer retail stores thanks to the EMV shift, which moved us from swiping our credit cards to inserting them into a terminal and waiting for the transaction to complete. With the average transaction time still taking between 5-10 seconds, down from 15 seconds six to eight months ago, US consumers have had friction added to their checkout process. It is with this retail experience in mind we were hopeful, last fall, that mobile contactless payments would take off. Toward the end of 2015, roughly 17% of iPhone owners had used Apple Pay, and 7% of Android owners had used Android Pay. Part of this had to do with less than 50% of the iPhone installed base in these markets having devices that are Apple Pay capable. An even smaller number of Android-based devices in use are NFC capable. Here we are a year later, with exponentially more smartphones in the market NFC capable, and interestingly, not a lot has changed.

When it comes to tap to pay terminals, the US is well behind markets like the UK and Australia. While we are still in early days with consumers paying with their smartphone in those markets as well, a majority of consumers there are already using tap to pay on a regular basis using their bank-issued card with an NFC chip in it. We decided it would be interesting to study consumers in the UK, Australia, and the US in order to see the contrast between mature contactless (tap to pay) payment markets and one like the US where it is all brand new.

We asked consumers in the US, UK, and Australia if they have ever used a form of contactless payment, defined as tapping to pay with your bank-issued card or mobile phone.


As you can see when it comes to contactless tapping to pay behaviors, markets like the UK and Australia, with bank-issued cards that have tap to pay functionality and the vast majority of merchants accepting tap to pay, it paints a very different picture than the US market. Where ~80% of consumers in the UK and Australia have used a tap to pay method, 80% of consumers in the US had not. Part of this has to do with minimal acceptance of contactless methods at US retail, compared to many merchants accepting it in the UK and Australia.

To further highlight the stark differences of the US market compared to the UK, and Australia, where a form of contactless payment is a normal transaction behavior, 61% of US consumers said they are not that familiar or not familiar at all with any kind of contactless payment method. One solid conclusion from our research is we still have a lot of educating to do on the US market.

Room to Grow for Mobile Payments

After studying all three markets, what I found most interesting was first, the disparity between consumers using contactless in the UK and Australia and those not using it in the US as outlined above. The second thing that stood out was how all three markets were remarkably similar when it came to usage of mobile contactless payments. Meaning, using something like Apple Pay, Android Pay, or Samsung Pay.


The chart shows the types of contactless transactions consumers have tried in all three markets. Interestingly, while tapping to pay with your credit/debit card is an established behavior in the UK and Australia (over 50% of the market uses this method on a weekly basis), consumers in those markets have yet to fully transition their contactless payment behaviors from their credit/debit card to their smartphone, even though it is accepted almost universally in their country.

When it came to which mobile contactless payment was most popular among those who said they have used their mobile phone to tap and pay, Apple Pay is the most common form of mobile payment with 62% usage share of mobile contactless methods compared to less than 30% for Android Pay and Samsung Pay respectively.

While we are still new to paying for goods and services with our smartphones, the future seems bright. Our research found consumers who have used Apple Pay, Android Pay, and Samsung Pay had high satisfaction levels with the experience, with speed and convenience the biggest factors in their satisfaction, and a high propensity to use it more often in the future.

Security Still the Largest Barrier for Non-Users

The sleeper story for consumers is security. While this happens to be one of the single most important reasons to adopt contactless payments, it is also the one least understood by consumers. In all three markets, 40% of consumers listed security concerns of adding their credit/debit card to their smartphone as the main reason they have yet to try it, while 29% said not trusting the transaction was secure as their main reason.

In an era of heightened awareness of identity fraud, merchant breaches of credit card data, and more, it is not surprising security concerns came up time and time again in our study. Yet, a data point that stood out was 45% of consumers stated an increase in willingness to use mobile contactless payments if retailers and banks helped them understand the security benefits of using something like Apple Pay, Android Pay, or Samsung Pay. This was listed as the single biggest thing retailers and banks could do to get them to use mobile contactless payments.

As I analyzed the data of over 50 questions between all three markets and the responses of 1,761 consumers, I’m convinced as ever mobile payments are the future. As more banks support it, merchants accept it, and consumers understand the security benefits, I’m convinced we will get to an era where paying with our smartphones is the normal and most common behavior. However, our research strongly suggests it is not consumers standing in the way of adoption. It is retailers and banks who need to make the appropriate moves to bring this safer and more secure way to pay to their customers.

I’ll be presenting the full findings of our research at a VIP event hosted by NXP in Las Vegas on October 24th. If you are coming to Money 20/20 or are a VIP in the banking and transaction industry, or media, let me know if you would like to attend.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

7 thoughts on “Mobile Payments: The Future is Here, just not Evenly Distributed”

  1. Interesting, thank you.

    I’m wondering if the differing “contactless” stats aren’t due in whole or in large part to public transportation. In my own France, all buses and metros have switched to that a few years ago (not all highway tolls nor car parks have yet by far), and they’re very widely used. Is that true in the US ?

    Apart from that, banks and the gov. just unplugged the generalized wireless payment solution Moneo after 6 years because of disuse. It was an NFC contactless verificationless payment system tacked onto credit cards, for small amounts, meant to displace small cash payments. ATMs allowed you to put a small amount ($10-$200) in the Moneo NFC chip of your credit card, and then you just waived it at the terminal for payment. I think the need to pre-charge the chip due to the lack of IDfication did it in, especially since it was not even a default behaviour at the ATM” Moneo empty – Charge it ?” but a separate pro-active choice lost amid all other ATM operations. It was fairly ubiquitous, supported by almost all cards, terminals and ATMs. Yet it failed.

    1. We asked which types of transactions were used most frequently and transportation is certainly there but not by a landslide. Supermarket, fast food, etc..

      It is clear it is an entrenched behaviour for many different transaction types in UK and Aus.

      Do you have the 30 lb/$/euro limit per transaction like the UK does?

    2. Agree with your point that public transport is a huge reason for the general public to embrace a contactless payment system. This is definitely the case for Japan as well. In fact, the FeLiCa system that iPhone 7 recently embraced is designed specifically for this case with a major feature being the speed of the transaction, which has to be less than 200ms to handle the sheer number of people who get on the train.

      What happened in Japan was that the payment system for public transport was soon repurposed for generalised wireless payments. Since you could pre-charge at almost any railway/subway station, charging it was not a problem. Furthermore, you can always charge at the shops where you use them as well.

      Other charging methods, including using your smartphone, came naturally thereafter.

      In Tokyo, there are more wireless payments cards than there are people, and you also get a discount by using these cards for public transport.

      Going to contactless mobile payments on your smartphone has been slower, but this is no doubt largely due to the iPhone having a huge market share among smartphones.

      What’s really interesting here though is not whether one region is ahead of the others, but where we can expect to see the most innovation. Mobile payments as simply a cash replacement is kind of boring. There are already some experiments to use anonymised public transport usage data from these payment systems to track user behaviour, similar to what Google tracks with Android GPS. We might also see innovative usage for promotional purposes. Another possibility is that shops may go a redesign so that instead of paying at a cashier, you might pay at the spot. In particular, the Western system of paying at the table at restaurants is not exactly efficient and could be “disrupted”. Restaurants could then maximise the number of customers served (and maybe disrupt the tipping system too).

  2. In canada, tap to pay is the second transition in payment types to come along. We’ve had swipe & pin debit transactions since the 90’s or before. Recently (sometime in the past 10 years?) that shifted to chip & pin. Tappable payment terminals have started to appear but are by no means ubiquitous (they’re common enough that the places that don’t have them often have little “no tap” signs of the card readers) and in any event for security, you’re required to input your PIN for large transactions, so there’s little incentive to get in the habit of tapping.

    The thing that really feels primitive about the US from up here is that you still don’t yet have a real alternative to credit cards, with their greedy and extremely high merchant fees. Up here, debit uses an entirely separate system (Interac), established by the banks as a nonprofit with the mission to minimize parasitic transaction fees. Essentially every merchant accepts Interac, with only the smallest and most cash-strapped ones charging any fee for it. The only time I have any reason to pull out my credit card is when I intend to pay for something over time.

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