Customer adoption of mobile payments is growing fast, and banks need to respond with products and services to cater to this growing demand, according to a new report released by financial researcher and consultant IDC Financial Insights today. The consultant's eighth annual Consumer Payments Survey showed that the popularity of mobile payments had more than doubled, with more than 33 percent of respondents saying that they use mobile payments services.
"Demand is clearly there," the report states. "Banks need to make sure that they are not left behind by non-banks that are more narrowly focused on the opportunity."
PayPal seems to be the most popular option in mobile payments for the moment, according to the report. The report found that of the respondents who claim to use mobile payments 56 percent said that they use PayPal for mobile payments. Amazon Payments and Apple's iTunes came in tied for second place with 40 percent of respondents saying they used the services for mobile payments.
The report also noted that online bill payments are now the most common way that consumers pay their bills. Online bill payment was used by more than 73 percent of the survey's respondents.
IDC Financial Insights also noted that the report found strong growth in prepaid cards, particularly network branded cards. The report suggested that banks could strengthen their position in this market and others by building on their rewards programs since banks are involved in so many transactions and have the most data on their customers. Targeted offers, the report says, could offer revenue in the prepaid cards and mobile payments markets.
"The advent of new card-linked offer programs should increase the influence of rewards on the average consumer, however, this will depend on how many banks choose to move ahead aggressively with these programs, and how many customers choose to support them," Aaron McPherson, practice director at IDC Financial Insights, said in a statement. "Based on our results, we expect to see continued growth in open-loop prepaid cars and mobile payments next year."
Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio