WASHINGTON–Mobile payments continue to grow in popularity, but, not surprisingly, one demographic continues to lag in using the technology.
The research, which is being distributed in the form of a chartbook, also uncovered one reason so many unbanked remain that way.
New research from Pew’s consumer banking project titled, “What Do Consumers Without Bank Accounts Think About Mobile Payments?” found fewer than half of unbanked smartphone owners had ever made a payment using the devices.
Among the key findings:
- Mobile payments use is significantly lower among the unbanked. About 39% of unbanked smartphone owners have ever made a purchase, paid bills, or sent or received funds using mobile payments technology compared with 64% of banked smartphone owners.
- Reliance on cash and checks, and the cost of phone service, are two major barriers to the use of mobile payments by those without bank accounts. The most significant barrier to mobile payments use for unbanked consumers is poor compatibility with paper checks, their most frequent form of income, and cash, which they use regularly for payments and purchases, even more than safety, which is the top concern of banked consumers, Pew said.
- About six in 10 unbanked consumers have a smartphone, but they are nearly twice as likely as banked consumers to suspend or cancel their cellphone plans as the result of the cost of maintaining coverage, which for these consumers, equals nearly a half a month’s pay each year.
- Eighteen percent of unbanked consumers canceled their cell phone service for at least a month in the past year due to financial hardship.
Among the other findings:
- About 15% of U.S. consumers—approximately 37 million adults—do not have a bank account; these consumers say overdraft fees are the most common reason they are unbanked.
- The majority of unbanked consumers have household incomes under $25,000 annually.
- Unbanked consumers are less likely than those with bank accounts to say that they will make a mobile payment in the next year and are less interested in using a smartphone to receive rewards and discounts.
“Newer technological developments in the marketplace, such as taking a picture of a check to deposit it or adding cash to a prepaid account at a retail location, show the potential of mobile payments for the unbanked,” said Joy Hackenbracht, research officer for the consumer banking project. “But right now, the unbanked are significantly less likely to have used their phone to make a payment. Difficulty loading funds—depositing a check or cash—is the biggest barrier to mobile payments use for unbanked consumers.”