The days of the credit card could be numbered following a survey which found that UK shoppers increasingly prefer to use mobile payments instead.
The ‘Banking Moving Forward’ study by Experian found that more and more British consumers are using their mobile devices to make transactions, and that a growing number of us think traditional debit and credit cards will disappear entirely within the next few years.
Overall, a third of the UK population (33 per cent) believes credit and debit card payments will no longer be the preferred method of payment in 2020, as paying with a smartphone becomes the method of choice instead.
The findings show that while cash and card payments still dominate today, British consumers believe that alternative methods of payment such as smartphones will become more widely used over the next five years.
By 2020, 67 per cent of respondents think that cash will have decreased in popularity, while two in five (41 per cent) think there will be a decline in the use of credit and debit cards as they currently are.
And continuing the current trend for using biometric data to provide extra security around payments, 14 percent of the population believes that biometrics, such as retina or fingerprint scans, could also become commonplace by 2020, with two in five (44 per cent) say they would be prepared to make payments via biometric scanning.
But the study also found that fears over cybercrime, particularly fraud, are holding many consumers back from using their devices for making payments.
Almost half of people surveyed (46 percent) confessed being scared that their identity might be stolen online, while 60 percent of smartphone users said they had no malware protection on their devices, leaving them vulnerable to hacking by cyber fraudsters.
However companies and websites that made it easy and safe to do business with will reap the benefits, as customers increasingly trust a certain selection of sites to shop online.
When asked about how other forms of payment could fare, four in five (80 per cent) said that secure online payment platforms, such as, for example, PayPal, that let people shop using their debit card, credit card or bank account without sharing their financial details will become more popular by 2020.
“People will certainly be faced with more choice in years to come with the payment methods and providers they choose. Their decision will ultimately be based on the ability to pay for something, securely, anywhere and at any time at their own ease and convenience,” said Derek Garriock, head of business solutions, Experian UK and Ireland.
“Security is a key concern for many individuals, who may be willing to adopt new ways of paying but have not yet done so, even amongst the younger generation. This is understandable considering that one in six adults has fallen victim to a cyber-attack via their mobile device.”
A recent Deloitte report predicted that in-store mobile payments will increase by more than 1,000 percent worldwide this year, and British consumers also appear to be ready to embrace mobile payments, with many leading retailers also keen to implement the technology into their stores.
A separate survey conducted for Oxygen8 also found that over half (47 percent) of mobile users in the UK would like to use their mobile phone more to pay for goods and services.
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It’s encouraging to see consumers becoming more confident
at the prospect of using mobile devices to make payments. The security fears
surrounding the technology however remains a common misconception that needs to be addressed.
This misconception isn’t new; we observed similar reactions with the introduction of contactless cards. Spurious and often ill-researched press articles sparked fears about security flaws, and yet the reality is that tap and pay fraud is rarely reported. Consumers spent £2.32bn via contactless in 2014 - up from £653m in 2013, allaying fears around security and I suspect the same will happen with mobile over time.
Paying through a mobile device is inherently more secure than a contactless card, as most consumers password protect their devices and digital wallets, and in the case of Apple Pay, need fingerprint authentication at the point of transaction. Furthermore, consumers are becoming increasingly
more dependent on their smartphone for a multitude of everyday uses and they’re far more likely to forget their wallet than their phone. Consumers will soon realise the added convenience to mobile contactless transactions, paying with a simple, single touch of a phone that is already in hand, rather than reaching for their wallet and searching for a particular card, and I believe its a
combination of all these factors that will bring about a sea change in behaviour
probably much sooner than 2020.