PLEASANTON, CA - Apple, Google, Facebook, and Amazon appear well positioned to take the lead in the mobile payments landscape except for the fact that these companies do not garner the same level of trust as others in the payments space, according to a new report from Javelin Strategy & Research.
In the report, Javelin suggests the top spot in mobile payments is still up for grabs because consumers trust PayPal, Visa and their own banks more than mobile networks, social media and retailers when it comes to making financial transactions. The report points to consumers growing confidence in making mobile purchases, with 41 percent of these purchases going to physical goods in 2011 compared with 14 percent in 2009.
“Trust implies reliability, security, integrity, and strength – it is integral to consumer adoption of a financial product,” said Mary Monahan, executive vice president and research director for mobile at Javelin Research and Strategy, Pleasanton, CA.
“Perhaps the most surprising findings are the very high trust ratings garnered by PayPal, which captured second place with almost 1 of every 4 consumer votes or 23 percent,” she said.
“Visa, the largest payment network, is the brand that the greatest percentage of U.S. consumers trusts with their financial information. Facebook and Sprint are the least trusted brands for financial information among consumers of all institutions surveyed.”
Partnerships are key
The report is titled Gang of Four (and Possibly Five) Apple, Google, Facebook, Amazon – and PayPal: Positioning for Payments in the New Mobile‐Social Technology Era.
The report analyzed consumer perceptions of mobile payments players based on trust, innovation and privacy.
Javelin scored brands on trust, innovation and privacy. PayPal came closest to reaching what Javelin calls the “Gold Zone” with high scores for trust, innovation and privacy position.
Financial institutions scored well among their own customers and received the highest rankings for trust in security, protecting private information and innovation. However, their overall scores in all three categories were low.
The report suggests that no brand can reach the Gold Zone on its own and must partner with companies to deliver complementary strengths in order to be able to drive widespread adoption of mobile payments.
Consumer confidence grows
Consumer mobile purchasing behavior is shifting from “nice to have” purchases such as ringtones to “needs,” according to the report. This reflects that consumers are finding more value in purchasing via mobile devices.
Key findings include that 16 percent of mobile consumers made at least one mobile purchase during the past 12 month. The average consumer who makes mobile purchases buys about three items a month using a mobile phone.
The top mobile purchases were physical goods (41 percent), music (35 percent) and apps (34 percent).
“During times of technological change, companies that create innovative products, services, applications, and content can build connections among users to create a larger network effect,” Ms. Monahan said.” The networks that attract the largest numbers of customers usually end up winners in the next technology cycle.
“Thus, firms are willing to lose money to attract a bigger base during the initial stages of a new tech cycle,” she said. “Within the most recent cycle, traditional online companies have a distinct edge if they can successfully transition their existing e-services in ways that capitalize on the new characteristics of the mobile and social realms.
“The ‘Gang of Four’ is particularly well-positioned to dominate in the newest mobile-social tech cycle.”