While adoption is growing of mobile payments applications, their impact is minimal so far this holiday season, in part because merchants are not making shoppers aware of the options that are available, according to a new report from Punchtab.

The report, Mobile Payments: Consumer Insights & Recommendations, found that 67 percent of consumers do not know if their favorite stores offer mobile payments. Starbucks, which is the most popular mobile payments app among consumers, exemplifies the benefits of a well-constructed and properly promoted app for merchants.

“While Apple Pay retail partners include some Christmas-time heavy hitters like, Aeropostale, Bloomingdales, Foot Locker, Macy’s, Nike, Sports Authority, Toys R Us, Walgreens, and of course, Apple retail stores; the Black Friday Apple Pay use was lower than some expected,” said Robyn Hannah, vice president of PR and communications at PunchTab.

“According to infoscout.co – ‘Out of all Apple Pay-eligible transactions on Black Friday, the new NFC-powered mobile payment method was used less than 5 percent of the time,’” she said. “And as it turns out, poor communication was the major obstacle with 31 percent of those eligible users citing that they didn’t use their mobile payment app because they didn’t know if the retailer accepted that form of payment.

“And the PunchTab research echoes those concerns with 67 percent of consumers reporting that they don’t even know if their favorite stores offer a mobile payment option.”

Early adopters
While mobile payments are expected to take off over the next few years, as of October 2014, consumers are mostly still dabbling, with just 24 percent of smartphone owners reporting having used a mobile payments app, according to PunchTab’s research.

Among those who have used a mobile payments app, Starbucks clearly stands out with over 40 percent having used the coffee house chain’s app.

The report found that the widespread adoption of the Starbucks app is helping to introduce consumers to the benefits of mobile payments. For example, those consumers who have used the Starbucks app are more likely to consider benefits such as speeding up checkout and the automatic recording of loyalty points when deciding to use a mobile payments app.

Starbucks users are also more likely to consider the ability to receive special offers in an app, the elimination of the need to carry cash or credit cards and the display of available loyalty rewards when deciding to use a mobile payments app.

“Starbucks is leading the way in significantly shifting day-to-day consumer behavior,” Ms. Hannah said. “Of those who said they’d used a mobile payment app over 40 percent cited the Starbucks app.

“Starbucks just nailed it,” she said. “The experience is easy and convenient, allowing users to more quickly get their Double Tall Skinny Vanilla Latte and be on their way.

“And adding a loyalty program inside the app was brilliant. When asked about the benefits most important in choosing to use a mobile payment app, consumers said that automatically earning points in the loyalty program was second only to speed at checked.”

Shoppers want flexibility
In terms of consumer adoption, Starbucks is followed by Google Wallet in the number two spot, Visa Checkout, PayPal Wallet and Square Wallet.

The report also reveals that 55 percent of millennials and 46 percent of consumers over the age of 35 years old would prefer a mobile payments app that can be used at multiple stores and includes integration with specific stores.

The top reasons why consumer do not use mobile payments apps include concern about data security, named by 62 percent and a lack of a compelling reason, named by 31 percent.

The survey was conducted before Apple Pay was introduced, which could have a significant impact on consumer adoption since it is easy to use and is reliable.

Mobile payments offer a significant opportunity for retailers to connect with consumers directly and gather meaning data for optimizing their marketing strategies.

Providing value
Punchtab’s recommendations for retailers when it comes to mobile payments is to make sure an app is not a one-trick pony but provides added value via special offers and loyalty program features.

Retailers should also take a close look and what Starbucks and Apple Pay have accomplished with their apps, as this will be the standard the consumers will be holding them to.

It is also a good idea to target millennials, who are more likely to download and use a mobile payments app. These consumers can also help entice older shoppers.

“I think the most obvious, and notable news for retailers about mobile payments is that they’re here – easily and readily available – and nearly 24 percent of U.S. smartphone users are already using them – and that was before Apple Pay became available,” Ms. Hannah said. “This technology will soon be an expectation, not an exception.”

Final Take
Chantal Tode is senior editor on Mobile Commerce Daily, New York