Nearly a Third of Consumers Avoiding Mobile Payments Over Security Fears: Study

Most American consumers have made at least one mobile payment in the last year, but nearly one in three are actively dodging the payment method due to worries about their money’s safety, according to new research from The Pew Charitable Trusts.

The survey of 1,178 people found that 29% of respondents skipped paying via mobile sometimes or always due to fears about loss of funds, highlighting concerns many consumers continue to have about security and other complications they must face as their financial lives become more digital.

“Respondents generally said that credit and debit cards are well protected — 61% and 43%, respectively — and a third felt the same about prepaid cards (34%). But only 22% of respondents ranked mobile payments as well protected,” it reported.

Nonetheless, over half (56%) of Americans have made at least one mobile payment in the last year, according to the study, and they’re giving credit unions and other card issuers lots of opportunities to come along for the ride. More than 80% of mobile payment users connected a bank account or credit or debit card to the mobile app they used most often.

“Consumers who used mobile payments did so to supplement, not replace, other options and were more likely to use a wider array of payment types than those who did not make transactions using their phones,” the study noted. “Sixty-five percent of mobile payment users had used three or more payment types in the past month, compared with 45% of traditional payment users.”

The survey data also suggested that consumers might associate mobile payments with extra hassle.

Although only 2% of mobile payment users actually had an issue with a mobile transaction in the past year, they were reportedly twice as likely as debit, credit or prepaid card users to say that their disputes were hard to resolve. They were also four times as likely to not know whom to contact about the issue.

They also ended up with less: 86% of mobile payment users who disputed a transaction recovered all or most of their money, compared with 94% of traditional payment users, according to the study.

That may be one reason many consumers don’t consider mobile payments any more convenient than traditional payment methods, Pew noted.

“Paying with the use of a smartphone at a point of sale is not materially easier than using a credit card. Also, products and services are not received faster nor are transferred funds available sooner with a mobile payment, compared with traditional cards or accounts,” it said.

Respondents who found the dispute process difficult were more likely to say that they avoided certain payments for fear of losing money and distrusted the payment company. Pew also found that mobile payment providers frequently placed more responsibility for dispute resolution on consumers than traditional electronic payment companies did.

Gen Xers, millennials and Gen Zers were 74% of mobile payments users, according to the study data.