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Board of Governors of the Federal Reserve System
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Consumers and Mobile Financial Services
March 2014


As smartphones become more common and more versatile, they can play an increasing role in the interactions between consumers and financial service providers, retailers, and other businesses. The constant presence of mobile phones in consumers' lives also makes them a potentially useful tool for the delivery of just-in-time financial information or as an aid in decisionmaking. Given the prevalence of mobile phones--particularly smartphones--among minorities, low-income individuals, and younger generations, mobile technology has the potential to empower consumers and expand access to financial services for underserved populations. However, consumers will need to understand and weigh the benefits and potential risks to their security and privacy presented by the use of this new technology.

The use of mobile banking has increased substantially in the past year and appears likely to continue to increase as more consumers use smartphones or recognize the convenience of this service, and as more financial institutions offer mobile banking. And while the use of mobile payments, broadly defined, increased only slightly from 2012 to 2013, the use of mobile phones to make payments at the POS has increased substantially in each of the past two years. Indeed, nearly one in five smartphone owners report making a POS payment with their mobile phone in the past 12 months, and a similar number indicate that they are likely to do so in the coming 12 months. In addition, more than a quarter of mobile phone users express some interest in using their phones to make payments at the POS. Thus, mobile payments appear likely to have substantial growth potential as more retailers and businesses are able to accept them at the POS.

The main factors limiting consumer adoption of mobile banking and payments are security concerns and the belief by some that these services fail to offer any real benefits to the user over existing methods for banking or making payments. In terms of the value proposition to consumers, the significant number of mobile users who reported an interest in using their phones to receive discounts, coupons, and promotions or to track rewards and loyalty points suggests that tying these services to a mobile payment service would increase the attractiveness of mobile phones as a means of payment.

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Last update: Apr 15, 2014