More than 70 per cent of consumers use their mobile device to make payments, however, less than 50 per cent of businesses are optimised to accept mobile payments, according to a new report conducted by PayPal Australia.
The findings are part of the newly launched PayPal mCommerce Index, a biannual barometer on the state of mobile commerce in Australia.
The inaugural mCommerce Index surveys the payment patterns and expectations of Australian smartphone users and finds a significant gap between consumer mobile payments behaviour and the readiness of businesses to support mobile transactions.
The mobile payments opportunity gap
The PayPal mCommerce Index found a high level of mobile commerce adoption among Australian consumers, with 71 per cent of respondents reporting that they use their mobile devices to make payments and 22 per cent indicating they spend more than $500 per month via mobile.
Despite this, the Index found that only 49 per cent of online businesses are optimised to accept mobile payments, presenting an opportunity gap for Australian businesses looking to capitalise on mobile-savvy customers.
Furthermore, almost one third (31 per cent) of businesses state they have no plans to optimise for mobile sales, which is reflected in the proportion of online businesses (26 per cent) which have zero sales via mobile devices.
Libby Roy, managing director of PayPal Australia highlighted the clear opportunity gap for Australian businesses: “Australia has one of the highest levels of mobile penetration globally with 80 per cent of the Australian population owning a smartphone, so I was surprised to discover the low level of business readiness to accept sales effectively via mobile devices.
“The mobile payments landscape is fast evolving and the Index reveals how habituated Australian consumers have become to mobile shopping with more than a third of us making mobile payments at least once a week – a figure that jumps to 47 per cent for the under 35s. So although online businesses may think they don’t need to optimise for mobile now, they will have to if they want to stay competitive in the near future,” said Ms Roy.
M-commerce drivers and barriers
The data highlights that millennial customers are more likely to shop on a mobile device than any other demographic.
The Index found 85 per cent of smartphone users aged 18-34 buy via mobile – significantly above the national average – compared to 35-49 year-olds at 73 per cent and the over-50s at 52 per cent.
Younger Australians also shopped via a mobile device more frequently than any other age group, with 47 per cent indicating they do so at least once a week.
Australians shop on their mobile devices because they love the convenience (48 per cent), it saves time (48 per cent) and it’s easy (39 per cent).
However, when looking at the barriers to m-commerce, it is the younger consumers who are most annoyed when websites are not enabled for mobile (59 per cent) compared to 45 per cent for 35-49 and 28 per cent for over-50s.
Security was also a significant concern for respondents, with 46 per cent citing it as a barrier to m-commerce adoption.
David McLeod, Roy Morgan Research Analyst, said: “The 46 per cent of respondents concerned with security were less likely to be weekly mobile purchasers and also had a 24 per cent lower average spend on mobile devices compared to the total smartphone users. This implies a clear need for consumer education and support around the security and integrity of online payments”.
Social commerce, shopping via a social platform, has emerged as the new frontier for online commerce.
Already 11 per cent of Australian consumers report that they have made a purchase via a social platform in the past six months and 7 per cent of Australian businesses indicate they accept transactions via social media.
“It’s obvious that the early adopters in the business community are getting on board with social commerce as the business uptake at 7 per cent is not far behind consumer adoption at 11 per cent for this new way to buy and sell,” Ms Roy said.
“However there’s a huge gap between the early adopters and the majority in the business community – with 34 per cent of Australian businesses having no social media presence at all and 89 per cent of businesses stating they have no intention of accepting payments via social platforms within the next six months.”
Social media is also shown to be a strong channel for driving purchases with 18 per cent of respondents buying something after seeing it on social media, a figure that jumps to 24 per cent among the 18-34 age group. Despite this, 28 per cent of businesses don’t believe their customers want to buy via social media platforms.
Security was a significant barrier for consumers in relation to purchasing through social media platforms with roughly half stating that security and safety is a concern and 59 per cent stating they don’t want their financial information linked to their social footprint.
Among businesses, security concerns were lower (19 per cent), however, lack of understanding poses a challenge to adoption with 25 per cent of Australian businesses stating they don’t understand how purchasing via social media works.
PayPal says its mCommerce Index will be an ongoing, twice-yearly barometer on the state of mobile commerce in Australia.