Security Worries Have Consumers Clinging to Cash, Study Says

Cash is still king among shoppers, but mobile payment use is poised to explode — if consumers can overcome their anxiety about security, according to a new study from payments technology firm Paysafe.

The company’s interviews with over 5,000 adults in the United States, the UK, Canada, Germany and Austria found that 87% of consumers used cash in the last month to buy things, and 83% had visited an ATM. Just 9% of respondents said that they used mobile wallets while shopping in stores, and 41% weren’t interested in hearing about cash alternatives, according to the report.

“Despite the apparent benefits of low-friction payment technologies, these findings suggest many consumers aren’t ready to lose visibility of the payment process,” Paysafe Group Chief Marketing Officer Oscar Nieboer. “It’s clear that the benefits are not unilaterally agreed upon, with cultural and infrastructure trends at play, and it may be some time before adoption is widespread. In the meantime, there’s a need to continue servicing the cash consumer.”

Despite their professed preference for cash, half of all consumers (49%) in the survey and 55% of Americans in the survey said they carry less cash now than they did a year ago, however. The average American consumer carries $42 today — that’s $8 less than in 2017.

“With the increasing popularity of cash-driven solutions, it’s perhaps unsurprising that consumers now carry less actual hard cash around with them. In every country in the survey, consumers reported that they carried less cash than they did in the previous year,” the study said.

Owning a payments-enabled device appeared to boost mobile payment use among consumers.

“Among smartphone owners, 44% on average have used their device to pay, a good illustration of their appreciation of the benefits of mobile wallet technology. Penetration of smartwatches is much lower, at just 23%, yet nearly half (48%) of owners have used them for payments. As a rule, the people who do use smartphones and wearables for payments are great evangelists for them,” the Paysafe explained. “At the same time, 85% of users say that they’ll be using them much more in two years’ time — a good indication that overall usage is set to grow rapidly.”

But the real hurdle in the adoption of “frictionless payments” is security.

“Closer examination of the reasons for this low and slow adoption of frictionless payments shows that, once again, fraud is the most widely mentioned barrier, cited by 50% of respondents,” the study said. “But data security is also a major concern, expressed by 48% of respondents. And uncertainty is clearly a significant worry, either over being charged for things they didn’t buy (47%), control of spending (31%) or inadvertent purchases (28%).”

Another 56% reported that checkout-free stores – where smart technologies record the shopping basket and automate payments – sounded too risky, the study said.

Voice-activated payments systems are even less trusted right now. Only 18% of respondents said they used them, and 65% said voice-based systems were not yet secure enough for shopping. Just 11% of merchants in the surveyed countries accepted voice-activated payments — but another 24% plan to introduce them in the next two years, the study said.

The overall increase in availability of frictionless payment options could turn the corner on uptake.

“There may be a significant gap between early adopters and the rest of the consumer base now, but the numbers speak for themselves; once people are exposed to the benefits of the technology, adoption rates and attitudes improve extremely quickly,” Paysafe said.

Adoption rates could reflect experience, culture and geography, too. The study found that 70% of Americans felt online fraud is “inevitable,” but just 28% of Germans and 26% of Austrians felt the same way.