Australian businesses missing the boat on mobile payments: PayPal

PayPal Australia has launched the PayPal mCommerce Index, a biannual barometer on the state of mobile commerce in Australia. First findings: there’s a massive gulf between Australian consumers who want to pay by mobile and the ability of local businesses to enable them to do that. Also, social commerce is emerging as the new frontier of online commerce for businesses.

The PayPal mCommerce Index finds a high level of mobile commerce adoption among Australian consumers, with 71% of respondents reporting that they use their mobile devices to make payments and 22% indicating they spend more than $500 per month via mobile.

Despite this, the Index finds that only 49% of online businesses are optimized to accept mobile payments, presenting an opportunity gap for Australian businesses looking to capitalise on mobile-savvy customers. Furthermore, almost one-third (31%) of businesses state they have no plans to optimise for mobile sales, which is reflected in the proportion of online businesses (26%) that have zero sales via mobile devices.

PayPal Australia Managing Director Libby Roy highlighted the clear opportunity gap for Australian businesses: “Australia has one of the highest levels of mobile penetration globally with 80% 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.”

Roy said 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% 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.”

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% of smartphone users aged 18-34 buy via mobile – significantly above the national average – compared to 35-49 year-olds at 73% and the over-50s at 52%. Younger Australians also shopped via a mobile device more frequently than any other age group, with 47% indicating they do so at least once a week.

Australians shop on their mobile devices because they love the convenience (48%), it saves time (48%) and it’s easy (39%). 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%) compared to 45% for 35-49 and 28% for over-50s. Security was also a significant concern for respondents, with 46% citing it as a barrier to m-Commerce adoption.

“The 46% of respondents concerned with security were less likely to be weekly mobile purchasers and also had a 24% lower average spend on mobile devices compared to the total smartphone users,” said David McLeod, research analyst for Roy Morgan Research (which conducted the research for the index). “This implies a clear need for consumer education and support around the security and integrity of online payments”.

Social commerce: the next frontier

Social commerce, shopping via a social platform, has emerged as the new frontier for online commerce. Already 11% of Australian consumers report that they have made a purchase via a social platform in the past six months and 7% 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% is not far behind consumer adoption at 11% for this new way to buy and sell,” said Libby Roy.

“However there’s a huge gap between the early adopters and the majority in the business community – with 34% of Australian businesses having no social media presence at all and 89% 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% of respondents buying something after seeing it on social media, a figure that jumps to 24% among the 18-34 age group. Despite this, 28% 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% stating they don’t want their financial information linked to their social footprint. Among businesses, security concerns were lower (19%) however lack of understanding poses a challenge to adoption with 25% of Australian businesses stating they don’t understand how purchasing via social media works.

“If we look at the history of commerce in Australia we know that the incidence of internet purchases, over a three-month period, back in 1999 was approximately 5%. In 15 years it’s certainly possible that purchasing via social media by smartphone users will be as ubiquitous as online payments are now,” commented McLeod of Roy Morgan.

PayPal’s mCommerce Index will be an ongoing, twice-yearly barometer on the state of mobile commerce in Australia. The full report is available for download here.

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