5 Reasons Why Consumers May Favor Traditional Payment Methods

Jul 16, 2014 | Blog | 0 comments

It may sound strange, especially when there is an abundance of news flowing about the growing acceptance of alternative currencies like Bitcoin (and now Darkcoin) and the increasing demand from consumers for M-banking, but check-writing and other traditional payment methods are still a popular consumer bill payment option.

One Size Does Not Fit All

Banks may be openly concerned about payments disruption but are nevertheless recognizing that not all consumers are interested in adopting M-banking even if they own mobile payment-capable devices.

Some consumers (mostly the so-called matures and steadfasts) may never be interested in high-tech banking channels. Smart financial institutions who want to maintain their customer base will continue to offer more traditional ways of doing business while continuing to prove that alternative payment methods provide the same convenience and security as traditional methods namely cash, checks and credit or debit cards.

To serve customers who may prefer one payment channel or may want to make payments in multiple ways, banks and payments providers are embracing integrated receivables solutions into payments environments. (These solutions aggregate payments and remittance details received from multiple payment sources, i.e. lockbox, checks, wire transfers, ACH and card and can provide consolidated AR feeds and automate consolidation of internal and external data sources and with less errors.)

So there are still many reasons consumers may cling to traditional payment methods even in the face of growing alternative payment adoption. Here are a handful:

  1. Personal finance habits might take longer to change because money is so important to us.
  2. Convenience – Consumers are asking whether paying bills online is truly useful.
  3. Ease of use – If new technology is more hassle, why switch?
  4. Security concerns ranging from hacking, interception of payment information, identity theft and more.
  5. Not aligned with requisite technology – Consumers either don’t own M-payment capable devices, distrust technology or don’t understand the technology.

For example, switching from one smartphone to another is easier than switching from check writing to mobile payments or even from automatic bill pay to mobile payments.

And for some people locating a password and logging on to a device to pay a bill really isn’t as convenient as it seems.

Security concerns seem to be mushrooming. In addition to the recent wide-scale credit card security breach that damaged retail giants like Target, scammers are using nearly invisible devices to skim account numbers at ATM terminals making debit cards vulnerable as well.

Slow Growth in Mobile Payments

In the Fed’s Use of Mobile Financial Services 2013 Survey it was found, “76 percent of consumers who do not use mobile payments indicated that one of the main reasons they have decided not to use mobile payments is that it is easier to pay with cash or a credit card or debit card, and 61 percent said they did not see any benefit to using mobile payments.”

“Consumers are who are not making mobile payments are digging in their heels,” according to a Morrison & Foerster LLP client alert based on the Fed’s ‘2013 Survey’ which also cited the following:

  • Almost three-quarters of all mobile phone owners said that they were “unlikely” or “very unlikely” to use their mobile phones to make purchases at the POS, if given the option.
  • The holdouts are generally worried about ease of use (76 percent) and security (63 percent), and 44 percent said they distrust technology.
  • Others are not making mobile payments because they do not have the requisite technology (46 percent) or do not understand mobile payments (37 percent).
  • Breaking down the concerns about security, 22 percent were concerned about “interception of payment information,” 10 percent were concerned about “phone ‘hacking,’” 9 percent were concerned about lost or stolen phones, 4 percent were concerned about misuse of personal information, and 2 percent were concerned about malware or viruses installed on their phone;
  • 52 percent were concerned about all of these issues.1

Besides in the US market, which lags behind Europe in banking services technology adoption, consumers say they shop for a bank with a local branch because they like the experience of walking into a bank and meeting face-to-face with a banker.

Consumers may be writing far fewer checks every year but it seems they will be setting the timeline for their disappearance.


1 May 23, 2014, “The Fed’s Report on Mobile Financial Services: Slow Growth in Mobile Payments,” by Obrea Poindexter, Ryan Rogers, Jeremy Mandell and Amanda Mollo. Link: http://www.mofo.com/~/media/Files/ClientAlert/140523MobilePayments.pdf


Submit a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

3 Point Alliance

Founded in 1990, 3 Point Alliance has been a leading provider of end-to-end remittance processing solutions that exceed industry quality standards and reduce processing costs by streamlining payment operations.

Contact Us

777 Passaic Avenue, Clifton NJ 07012