Fed report shows gains in mobile banking and payments

Mobile banking adoption in the United States is on a tear. Survey results just released by the Federal Reserve Board reveal that 39 percent of adults with mobile phones had used those devices for banking activities as of December 2014. That's up from 33 percent in December 2013, according to Consumers and Mobile Financial Services 2015.

Most adults today have mobile phones: 87 percent of those surveyed by the Fed said they had mobile phones; 71 percent of those devices are smart phones, up from 61 percent a year earlier.

By far the most common mobile banking activities performed by adult consumers were checking balances and transactions (94 percent of mobile phone users, as of December 2014), transferring money between accounts (61 percent), receiving bank alerts (57 percent), remote check deposits (51 percent) and initiating electronic bill payments (48 percent). Twenty-eight percent of surveyed mobile phone users had used their mobiles to make payments last year, up from 24 percent in 2013.

Consumers and Mobile Financial Services 2015 is the fourth annual survey report issued by the Fed that examines how consumers use mobile devices to access accounts at federally insured banks and credit unions. The 78-page report contains a wealth of information about who is and is not using mobile devices for banking and payments, adoption rates and methods of access.

For example, the data shows that younger consumers are more likely to make mobile payments. So, too, are minority populations. Yet the report noted "no clear relationship between mobile payment usage and income or education level among those who own a mobile phone."

M-POS payments set for growth despite security concerns

The top two activities for mobile payments are bill payments and in-app purchases; at 24 percent POS payments ranked third. Despite its current standing, the Fed said mobile POS "is becoming less rare an occurrence."

Scanning quick response codes displayed on their mobiles is the method most consumers use for making mobile POS payments, with 31 percent of the user base. "While this remains the most common POS mobile payment, it is a decrease from 39 percent a year ago," the Fed wrote. Fourteen percent said they made payments by tapping or waving their mobiles near a POS device, while 22 percent used methods other than scanning, tapping or waving their phones.

One of the biggest drawbacks to consumer adoption of mobile banking and payments is concern about the technology's security. For example, when mobile phone users were asked how safe they believed personal financial information is when they use their mobiles to make purchases at stores, 28 percent said "somewhat unsafe" and 21 percent said "very unsafe."

Debit, credit and the underbanked

Mobile payments are most commonly funded using debit cards (55 percent). Credit cards are used by 51 percent; 15 percent use a nonbank account, such as PayPal, the Fed found. Only 8 percent of mobile payment users reported using prepaid cards, and just 4 percent had payments posted to their mobile phone accounts.

The Fed's data also points to significant opportunities for banks to reach underserved markets with mobile banking and payment services. According to the report, 13 percent of U.S. adults are unbanked; 14 percent are underbanked. Seventy-seven percent of the unbanked have access to mobile phones, 65 percent of which are smartphones. Among the underbanked 90 percent have access to mobile phones, and 73 percent of those are smartphones. What's more, 48 percent of the underbanked surveyed had used mobile banking during 2014, the Fed reported.

Editorial Note:

Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.

Notice to readers: These are archived articles. Contact information, links and other details may be out of date. We regret any inconvenience.