News & Analysis

PayPal mCommerce Index identifies social commerce as next frontier for mobile payments

- September 20, 2016 3 MIN READ

Almost three quarters of Australian consumers are using their mobile devices to make payments, with 22 percent spending more than $500 per month via mobile, according to PayPal Australia’s first mCommerce Index, but just 49 percent of online businesses are optimised to accept mobile payments.

The Index, a new twice-yearly report on the state of mobile commerce in Australia, saw Roy Morgan Research survey over 1,000 consumers and business owners to gauge attitudes around mobile payments, finding that overall there is a significant gap between consumer behaviour and expectations, and the readiness or willingness of businesses to support mobile transactions.

Libby Roy, managing director of PayPal Australia, said she was surprised to discover the low level of business readiness to accept sales via mobile given smartphone penetration around Australia, with 80 percent of the population owning a smartphone.

With more than a third of consumers making mobile payments at least once a week – up to 47 percent of consumers aged under 35 – Roy said businesses will have to optimise for mobile if they want to stay competitive in the near future.

Speaking at the launch of the Index in Sydney this morning, Roy said optimisation means business owners putting themselves in the shoes of the consumer and looking at how to make the process as frictionless as possible – this can be as simple as cutting the number of fields a customer has to complete when making a payment, she explained.

Among the most popular spending categories are bills or utilities, with 74 percent of consumers heading online to pay, while 53 percent are buying tickets, 43 percent are picking up clothing or accessories, and 38 percent spending on travel.

Perhaps as we would expect, 18-34 year old consumers are the biggest spenders on mobile, with 80 percent buying via their mobile device compared to 64 percent of 35-49 year olds and 31 percent of those aged 50 or above.

However, desktops and laptops are still the preferred method of choice for making online purchases for 69 percent of respondents, while 18 percent prefer making payments on their smartphone, and 14 percent on their tablet. Of those preferring to use a mobile phone, 30 percent sit in the 18-34 demographic.

The Index found 48 percent of consumers are buying or making payments via mobile because of convenience, with 39 percent stating it was easy. Barriers to using mobile are security, with 46 percent of respondents expressing concern, while 59 percent of consumers aged 18-34 year olds saying they got annoyed when websites were not enabled for mobile.

The survey also found that social commerce is emerging as the ‘new frontier’ for online commerce, with 11 percent of consumers reporting they had made a purchase via a social platform over the last six months and 7 percent of businesses stating they already accept transactions via social media.

While highlighting the fact early adopters in the business community are not far behind the savviest consumers, Roy said there is a huge gap between these early adopters and the majority of the business community: 34 percent of businesses still have no social media presence at all, while 89 percent of businesses stated they have no intention of accepting payments via social platforms within the next six months.

What’s more, almost 28 percent of businesses do not believe their customers want to buy via social media platforms, despite 18 percent of respondents – 24 percent of 18-34 year olds – stating they bought something after seeing it on social media.

Simon Holt, financial services partner at Facebook Australia, said Instagram had in fact implemented buying direct through the app after seeing streams of comments on ecommerce business profiles asking the user how or where they could buy the product photographed.

Similarly, Facebook itself and the likes of Twitter and Pinterest have also given business owners the ability to place ‘buy’ buttons directly on posts, while Facebook has integrated with services such as Uber and Venmo in the US to allow users to book a ride or send money to a friend direct from Messenger.

While many small business owners are yet to buy in, these tech companies believe educating the market around the opportunities will boost adoption. Highlighting the penetration of smartphones across Australia and, in turn, the opportunities for Australian businesses, Instagram last week chose Australia as the first market in which to activate its new suite of business tools.

The tools include special business profiles to help businesses better stand out to their customers, as well as insights to help users understand the activity they are engaged in on the platform and understand what is going on. Users are also taken through content strategy so they understand how to turn a successful post into a high-performing advertisement, helping them put the right story in front of the right customer at the right time.

Launching the suite of tools in Sydney, Instagram COO Marne Levine said her goal is to make Instagram an easy home for small businesses to grow and thrive on.

“We want to help them deepen their relationship with existing customers and reach new customers in places where they have not been able to reach before.”

Image: Libby Roy and Elaine Herlihy of PayPal Australia. Source: Supplied.