Mobile phones set to overtake credit cards for payments

Michael Bennet
JUNE 25, 2015
THE AUSTRALIAN
Australia is on the verge of a drama­tic shift in how people shop, as mobile phones appear set to overtake credit cards as the prim­ary way to make payments.
While mobile payments are still small in Australia, new ­research shows the potential for “explosive growth” due to the high penetration of contactless-enabled terminals, high ownership of smartphones and widespread adoption of “near-field communication” technol­ogy allowing Visa’s payWave and MasterCard’s Paypass.
The report from Visa and RFi Group yesterday showed the rapid rise of the cashless economy, with payWave transactions rising to 75 million in January, almost­ double the 40 million of a year earlier, helped by super­markets installing NFC.
It boosted contactless payments to more than 60 per cent of all face-to-face Visa transactions, up from 40 per cent 12 months ago.
For banks, the research highlights the importance of attracting and securing digital custom­ers, given they were found to have on average 2.8 products with their main lender, compared with 2.2 products by those who don’t bank online or on mobile.
Digitally savvy customers are also more likely to approach their primary bank for more products, including the most lucrative ones such as mortgages and personal loans, and are stronger advocates. They also hold their mortgages for longer, making them even more valuable.
“Banks know that digital is a key channel for customers, but for the first time this research shows that their digital customer is actually their most valuable,” said RFi managing director ­advisory Alan Shields.
But the downside for banks is 70 per cent of digital customers still view branches as their most important banking channel, suggesting they will unlikely be able to make mass closures to cut costs amid a tougher environment.