The FINANCIAL -- NEW YORK -- Forty percent of North American consumers have used their smartphones to make a payment at a merchant location, according to an Accenture survey of 4,000 consumers in the U.S. and Canada, up from 16 percent reported in a similar survey two years ago. Millennials and high-income consumers – household income of at least $150,000 – are the most avid adopters, with 52 percent of millennials and 55 percent of high-income consumers having used their phones as a mobile payment device.
“Digital payment technologies are maturing and we have seen more aggressive market entrants that are providing consumers with convenient and secure digital options for making payments,” said Matthew Friend, managing director and head of Accenture Payment Services in North America. “Our research shows that millennials are most likely of any age group to use a smartphone to make a mobile payment, and are in fact driving the adoption of new payments technologies.”
Of those consumers who have never used their mobile phone as a payment device in a merchant location (60 percent), the two most cited reasons preventing them from doing so were security concerns (57 percent) and privacy concerns (45 percent).
Digital currencies usage will increase driven by millennials and high-income consumers
The study found that eight percent of respondents use digital currencies to complete a payment transaction at least weekly, and 18 percent expect they will use digital currencies at least weekly by 2020. Digital currencies were defined as a form of currency or medium of exchange that is electronically created and stored. The primary reasons cited for embracing digital currencies is for protection of personal identity (46 percent) and lower transaction costs (43 percent).
Millennials and high-income consumers are expected to drive the use of digital currencies. Today, 13 percent of millennials and 19 percent of high-income respondents are using digital currencies to make a payment at least weekly, and 26 percent of millennials and 32 percent of high-income consumers expect to do so by 2020. Lack of information remains the number one reason why people today do not use digital currencies, with 38 percent of consumers not interested in using digital currencies saying they need more information before they will consider it.
“Our survey reveals that customers are increasingly embracing alternative forms of payment,” said Dave Edmondson, senior managing director and head of Accenture’s Banking practice in North America. “As payments technologies continue to evolve, financial institutions will need to upgrade their middle- and back-office legacy systems in order to support customer demand for faster, more real-time digital payments.”
Traditional payment forms are still dominant, but consumers anticipate usage decrease
The survey also indicates that by 2020 many traditional payment forms will decrease. Today, 66 percent of respondents said they make cash transactions, 59 percent use debit cards and 55 percent use credit cards at least weekly to make a payment. When asked how they anticipate using these payment instruments in 2020, the respondents indicated they would decrease usage of cash, debit cards and credit cards as payment instruments at least weekly by 12 percentage points, six percentage points and three percent points, respectively.
“By 2020, we anticipate the first decline in credit card usage in more than five decades and in debit card usage since they were introduced,” added Friend. “While millennials and higher income consumers are paving the way for increased mobile payments and the usage of digital currencies, we expect the other age groups to increasingly embrace these payment methods as more consumer friendly and secure solutions become available in addition to merchants adopting these technologies.”