Adopting new payment technology: The security vs convenience trade-off

Author: Sheree Rudinger, Managing Director - Canada, RFi Group

With the ever increasing digitalisation of payments, I regularly get asked by clients across the globe about the barriers to adoption and how they can maximise activation and usage rates on everything from contactless payments to digital wallets.

Having considered this question across multiple products and services, it has become clear that there are two consistent findings across every market we’ve researched at RFi:

  1. When asking a consumer directly about why they do not use a particular new payment type, a perceived lack of need plus concerns about the security are generally the two top responses.
  2. When comparing attitudes towards new payment methods by users vs non-users of the method/channel, security concerns are similar and the key to driving usage lies in convincing consumers of the convenience of the new payment mechanism.

In our surveys we will regularly test usage and attitudes towards more recent and emerging technologies such as contactless card payments, mobile payments and digital wallets. Using contactless payments - NFC credit or debit card payments - as an example of a relatively recent payment technology, we have seen that the top three barriers to usage includes both a perceived lack of need for the technology and trust/security concerns across many markets:

The non-users of contactless cards are telling us that this is what is stopping them, but how different is this to what existing contactless users feel about the technology? We asked both users and non-users of contactless cards about their agreement with a series of statements about contactless cards and found one clear point of agreement: contactless users are just as concerned about the security of the technology as non-users. It is in the perceived convenience of the payment where there are significant differences between these groups, highlighting where the key to increasing adoption rates lies.

The graph below highlights this trend. For example, in Canada, both existing contactless users and non-users have a similar perception that contactless payments are secure (23% of contactless users are in agreement, compared to 27% of non-users).

Perception of Convenience vs Security of contactless payments

The big difference is in the gap between the perceptions of convenience vs security; in Canada the gap for contactless users is 56% in favour of convenience, compared to only 23% for non-users. This trend is consistent across other markets.

Gap between agreement that contactless payments are convenient vs secure



So how do financial institutions go about demonstrating the convenience of the product or service to consumers? Just marketing the concept isn’t enough – we’ve all seen the ads showing consumers happily tapping their card or their phone against a merchant terminal and quickly completing their transaction. Despite these ads, there is still reluctance in the general population to adopt the new technologies – the newer the technology, the more significant the barriers to adoption.

Once awareness is created and opportunity is provided, the key lies in encouraging trial and then providing them with a seamless experience when they do - hence proving the convenience.

Everett Rogers’ well known theory of ‘Diffusion of Innovations’ identified the 5 steps that a consumer will progress through before adopting a new technology:

  1. Awareness (knowledge)
  2. Interest (persuasion)
  3. Evaluation (decision)
  4. Trial (implementation)
  5. Adoption (confirmation)

When it comes to new technology and payments, the hard part is getting consumers to the trial stage and then, as our research shows, once they use the new product/service they tend to be convinced of the convenience and readily adopt.

We know that giving away something for nothing will encourage a higher proportion of consumers to act. Rewards points, gift vouchers, cash back can all be used to potentially increase the number of individuals trialling and subsequently adopting new technologies. However, these of course can be a costly option to shift consumers to electronic or digital products and services – and when looking at the adoption of contactless cards, we have seen that it’s not always necessary.

Australia is a prime case study when it comes to new payment methods and encouraging trial, demonstrating the convenience and seeing mass adoption. Contactless cards were first launched in 2008 in Australia, but it wasn’t until the two major supermarkets started accepting (and promoting at POS) contactless payments in 2011 when there was a sudden surge in usage. Those who were teetering on the edge of the “interest” or “evaluation” stages were converted into “trial” by the implementation of the contactless terminals at two of Australia’s largest merchants – which between them account for more than 30% of all Australians’ annual expenditure. As seen in the below chart, contactless credit card payments in Australia increased by more than 300% between 2011 and 2014, and Australia now has more contactless transactions per capita than any other country in the world.

Annual Number of Transactions in Australia, Contactless vs. Total, in Millions


The story continues in Australia with the recent introduction of “Tap ‘n’ PIN” usage for contactless payments over the “no PIN required” contactless limit (currently A$100). One of the major international schemes has quoted that 15% of its Australian contactless transactions in October 2014 were for amounts over A$100 – a percentage that has shot up from next to nothing just 6 months earlier. It appears that this behaviour has been wholly driven by both cardholders and merchants themselves, who seem to have noted how convenient a “Tap ‘n’ PIN” transaction can be.

So when looking forward to emerging payment methods such as mobile or digital wallets, it’s possible that giving rewards of some kind to encourage trial might not be necessary, and having the right merchants accepting the payment method is likely to go a long way in increasing trial and adoption. After all, when it comes to technology adoption in the payments space, familiarity breeds comfort. 

If you have any questions regarding this article, please feel free to contact the author:
Sheree Rudinger, Managing Director - Canada, RFi Group
+1 416 823 3926