‘Charge-to-mobile’ is the new challenger to cash

Charging purchases to a mobile phone bill is the latest alternative to cash in the payments industry. Convenience is the main draw of the service and it is most popular for low-value items, but consumers currently lack confidence in its security.

The significance of contactless payment stepped up a gear earlier this month when the UK Card Association revealed a 255% increase in spend during 2014 to £2.32bn, pushing it firmly into the mainstream and highlighting the rising adoption of alternatives to cash.

It’s encouraging too for the growth of the ‘charge-to-mobile’ payment market, which allows users to charge everyday products to their phone bill.

At present, 35% of mobile users would be happy to pay for every day items by charging them to their mobile, according to a study of 1,000 people by mobile engagement firm mGage.

The majority of these consumers (80%) would be happy to charge up to £15 to their mobile with those aged 31 to 34 willing to spend most.

Among those who have already paid for goods via their mobile bill, it is charities that most frequently get consumers to part with their cash as 29% have donated money in this way.

Car parking tickets and downloadable content such as digital magazines are the second most common purchase at 18% each, while 12% of people have funded online gambling and 5% have bought cinema or concert tickets using their monthly mobile phone bill.

Juan Ageitos, senior marketing manager at mGage, believes the use of charge-to-mobile payments is likely to increase rapidly, in a similar way to contactless payments.

“It’s a question of convenience for the consumer,” he says. “As soon as people start to use it and their friends around them do the same they will see how easy it is. Charge-to-mobile is building momentum so brands need to move quickly.”

For those consumers who are happy to charge purchases to their mobile, over two-thirds (68%) would do so because it is quicker than entering their card details. Security is less steady ground for the technology, as only 31% believe it is more secure than a card transaction and 39% don’t feel it is a safe method of payment, so proponents have some way to go in establishing confidence in charge-to-mobile.

As Ageitos suggests, convenience is a big factor for 53% of people, while 26% like the idea of receiving fewer bills at the end of the month. Conversely, the main reason why 59% of consumers don’t want to charge items to their mobile is the fear of receiving a higher than normal phone bill, while 46% believe it could lead to them losing track of their finances.

When asked about purchasing specific items, consumers are most happy about charging the purchase of a sandwich to their mobile (45%) followed by a cinema ticket (43%) and a music album (42%). The higher the value of the product, the lower the number of people who are willing to use this payment method. Around a third (35%) would purchase an item of clothing this way and just 26% would consider buying a tablet, with 45% stating that they would be unhappy to do so.

The majority of consumers are also not convinced about the benefit of paying for household bills on their mobile: only 30% would think about charging their TV licence to their mobile bill, 27% would be happy to pay their broadband or TV service provider and just over a quarter 26% would be happy to pay for their utility bills, while 22% would consider paying for their council tax.

Half of consumers consider their mobile important when they are shopping. When doing so, the most common reason is using it for initial research, followed by using it for comparison in-store. At present just 23% of consumers aged 18-34 use their mobile to order products. However, almost two-thirds believe they will shop on their mobile more a year from now.

Trust and knowledge of the brand is hugely important for consumers looking to make a purchase on their mobile, while 29% take into account the length of time it takes them to go through the payment process and 22% consider how easy it is to find and view products. Nearly half also state that they would be more likely to purchase products and services on their mobile if they could do so with just two clicks, rather than having to input their card and address details.

Retailers do still have some way to go to get consumers on board with their mobile offering, however, as 56% do not feel that mobile has yet caught up with the web in the retail sector.

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