Who’s Driving Mobile Payments? (Hint: Some Are Barely Old Enough to Drive)


Companies looking to attract mobile-payment customers ought to be looking at 18- to 35-year-olds, according to a national study released today. Hitachi Consulting and the Bank Administration Institute (BAI) conducted the research, which shows that the “millennial” generation will likely drive mobile payment adoption in the coming years. Not only does the study help define who’s comfortable with payments on the go, but also what features are important in such transactions. Although the mobile payment market is expected to generate $633 billion by 2014, the lowest-hanging fruit is found in the younger crowd.

According to the study, when compared to other generations polled, millennials show the highest levels of using contactless payment methods (12 percent) and micropayments of $5 or less on the Internet (56 percent). While only 5 percent of those surveyed said they have a mobile device capable of making in-store purchases, 46 percent of that group is made up of those under 35 years old. What mobile or in-store payment aspects are important to this group? Ease of use topped the list, with 35 percent of survey respondents considering this a priority. Surprisingly, security and safety ranked behind at 27 percent, while speed of transactions grabbed the attention of 20 percent of those surveyed.

Brick-and-mortar stores, not to mention financial institutions, should definitely take heed of this kind of research. The relatively younger crowd is more willing to leverage the Internet, since many have grown up with it as recent teens, and consumers in this age group are adopting the mobile web faster than others too; last month, research group Forrester found that 23 percent of U.S. consumers age 18 to 44 own a smartphone, the highest adoption level for any age group. And the youngest of these, aged 18 to 30, use mobile web services the most: 85 percent regularly text message, compared to 57 percent of all consumers, and 37 percent use the mobile Internet, far higher than 23 percent of the total population.

Given the increased smartphone adoption in this group — and the fact that most new smartphones have a memory card slot — I’m thinking that Visa’s (s v) wireless payment memory cards show the most potential right now. Then again, it may not matter what I think: I’m too old to be in the millennial crowd, even with a smartphone.

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J Bhattacharya

Retail payment form factor change is only the beginning. The power of the mobile platform for payments is derived from the ability to enable secure and convenient transactions where it was not possible before. A short while ago just a few companies were certified to manufacture the terminals that accept credit and debit cards on the industry standard networks. This artificially kept prices high and competition at bay. The smartphone has changed that equation and mobile payment services that take advantage will not only shift share from the current, aging supply chain but will engender and drive new commerce due to democratization and efficiency.


I am not surpised that the “milleniums” are not concerned about security since a lot of them are being supported by their parents :)


Targeting mobile payments and micro-transactions for kids in high school and college could really kick start the industry. They are the true mobile phone junkies, many texting over 3,000 per month. Whoever can get them hooked on their payment platform will stand the best chance of dominating micro-transactions. As with Facebook, this could be a case of the kids leading and the adults following.


I think a lot of smartphones don’t have microSD slots. At least no iPhone or Windows7 phone has one spare to use for that. Some older Android phones have the same problem. Apple will probably have a hardware solution that they can also integrate into their iPod touch but a SIM card carrier solution works well for GSM subscribers with slight modifications. Cellphones will be better off if this technology is built-in instead of “added on” and I hope 2011 brings NFC to the masses in the USA.

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