Excitement About Mobile Payments Outruns Reality

© Can Stock Photo Inc. / DirimaCustomers are fired up to make mobile payments using Google Wallet and Apple Pay even if they don’t own the devices they would need to accomplish this.

That information arrives via a recent survey by Stratos, makers of a “connected card” solution along the lines of Coin and Plastc. In the survey, customers were asked about shopping plans for the holiday season, and 30% indicated they would like to use mobile payments such as Apple Pay or Google Wallet. This is a surprisingly high number, since Apple Pay only works with the iPhone 6 and 6+, and Google Wallet remains a niche product used by only a few enthusiasts.

The most generous estimates of 6/6+ sales put the figure at about 25 million. Even if all these were in the U.S. this would amount to fewer than 10% of the population, including children. .

Thiago Olson, CEO of Stratos, told Bank Innovation that the question asked how customers plan to shop, which could be interpreted as meaning how they would like to shop, not how they are going to shop. “There is definitely an element of aspiration here,” Olson said, adding that that the study clearly shows positive excitement around making mobile payments.

Respondents also indicated that with mobile payment, they may be likely to spend more. That’s great for retailers accepting Apple Pay, but may raise a red flag for consumer advocates concerned that increasing distance from paying with cash could get consumers into debt. Cards are already a step removed.

Customers also indicated that mobile payments are attractive to them because they are safer than card-based payments. Security experts generally agree, but it is security concerns that have routinely topped surveys looking at why customers avoid mobile banking. But post-Target and post-Home Depot, magstripe cards have been revealed as convenient but perilous. Consumer awareness of EMV, which is predicted to send fraud online away from the point of sale, is not yet firmly fixed in the public imagination. It would be interesting to see if more people have heard of Apple Pay than EMV cards.

The solution offered by Stratos allows users to load payment cards onto a single card that ties into a mobile app. When asked what distinguishes his company from the ill-fated Coin, Olson said his product has a deeper mobile tie-in, and accommodates EMV. “It’s really a mobile product, but we use the card because it is familiar and backward compatible.” Stratos also leverages tokenization, of which Apple Pay was the first mass-market implementation in the U.S. The company is based in Ann Arbor, Mich. and has $5.8 million in funding.

Beyond that, he said, Stratos avoided crowdfunding and media attention until its solution was closer to reality. Stratos will ship cards in 2Q 2015.