NEW YORK – A Javelin Strategy and Research payments analyst at Mobile Commerce Daily’s Mobile Research Summit: Data & Insights 2015 said mobile and digital are upending perceptions of trust in financial institutions, with online services such as PayPal ranked tops in safeguarding privacy and traditional banks falling down the list.

The session, “50 Shades of Pay: Tectonic Shifts in the World of Payments, Social, Retail and Data,” revealed that PayPal is ranked most trustworthy with financial information, followed by Visa, Amazon, MasterCard and Bank of America.  Notwithstanding the erosion of banks’ reputation, payment cards are expected to continue to dominate the landscape for the foreseeable future.

“In 2008, the integrity of the financial institutions was disrupted,” said Nick Holland, the Boston-based head of payments for Javelin Strategy and Research. “It’s been an ongoing erosion. Times are changing. People have payment networks that look and act like banks.

“It’s all perception,” he said. “Trust in your money is perception.”

Dominant plastic
Mobile Commerce Daily’s Mobile Research Summit: Data & Insights 2015 offered views from a host of experts on mobile commerce and topics and trends such as data, customer reach, digital divide, payments, location based advertising, media consumption and customer experience.

MasterCard payments system.

The presentation highlighted plastic’s dominance at the point-of-sale. Mobile phone payments were not even included in a chart showing the share of total POS payments volume by key payment category versus cash, paper checks, debit cards, credit cards, prepaid cards and gift cards because mobile’s share was less than 0.25 percent through 2018.

Attesting to mobile payments’ rapid growth, between 2012 and 2019, mobile proximity payment purchase dollar volume as a percentage of total POS retail purchases is expected to grow from $400 million or 0.01 percent in 2012 to $7.3 billion or 0.18 percent this year to $53.1 billion or 1.24 percent by 2019.

The session dramatized how mobile is disrupting the public’s view of traditional financial institutions, particularly with respect to privacy.

Survey respondents ranked PayPal most trustworthy with financial information, followed by Visa, Amazon, MasterCard, Bank of America, American Express, Chase Bank and Wells Fargo. Citibank and U.S. Bank were even farther down the list.

PayPal, which has a reputation of effectively keeping online transactions anonymous, also rated tops in protecting private information such as social security, passwords or date of birth. Trailing it were Visa, MasterCard, Amazon, American Express, Bank of America, Chase Bank and Wells Fargo.

A Telstra report this week found that most United States users of mobile banking applications no longer see passwords and usernames as secure and want devices to recognize them instead through fingerprint, voiceprint and other biometrics.

The report, “Mobile Identity – The Fusion of Financial Services, Mobile and Identity,” found that about 25 percent of U.S. consumers would share their DNA with their bank to secure financial and personal information.

Javelin’s research points to the likelihood of traditional institutions integrating more of their operations with mobile to reach consumers increasingly banking and making purchases via smartphones and tablets.

Meanwhile, the competition among technologies to become the mobile POS standard has produced differing evaluations of merchant and consumer scalability.

Services in the cloud connected to POS terminal via a PIN with the user logging in to service at checkout receive a grade of “A” for consumer scalability but a “C” for merchant scalability, according to Javelin.

Bar code systems in which a mobile application generates a bar code which the merchant scans with a reader get a “C” for consumer scalability but a “B” for merchant scalability.

NFC payments like Apple Pay that involve communication by host card emulation with a POS terminal, receive a “B” for consumer scalability and “C” for merchant scalability.

Massive leveler
Beacon payment systems, in which low-energy Bluetooth technology is used to detect phones in a store, receive an “A” for consumer scalability but a “C” for merchant scalability.

Mobile Research Summit: Data & Insights 2015.

“Mobile is intrinsically a massive leveler of the playing field in terms of who gets into this space,” Mr. Holland said.

“The transaction itself is still going to be owned by the owners of physical cards.”

Final Take
Michael Barris is staff reporter on Mobile Commerce Daily, New York