Why Americans are warming to mobile payments

Americans have long been behind other countries when it comes to paying for goods and services with a smartphone. Plenty still prefer to sign credit card slips or even checks. But by 2021, mobile payments are projected to reach $282 billion, triple the figure for 2016.

The Federal Reserve Bank of San Francisco points out that currently 30 percent of all consumer transactions in America are paid for in cash, over twice the Swedish rate. The average American also writes 38 checks a year, nearly five times the number of the average Brit. And in China, where the credit card industry has never taken off, the mobile-payments industry is more than 50 times the size of America's.

One reason for this small size is the fragmentation of America's payments systems. In China, for example, Alibaba and Tencent manage 92 percent of mobile transactions. America has 14,000 financial institutions and 16 payment processors running different systems. Such is the plethora of platforms that merchants have had little reason to spend money on the devices and software necessary for accepting mobile payments.

Companies in four sectors have started ramping up efforts to make mobile payments easier and more accessible. In December, Apple unveiled Apple Pay Cash. Samsung and Google offer similar services.

JPMorgan and Bank of America are part of a group of firms behind Zelle, which allows account holders at participating banks to pay each other instantly. In the last 12 months Zelle shifted more than $75 billion between bank accounts, nearly 40 percent more than in 2016.

Half of all American stores now take Apple Pay, a 50 percent increase on last year. Google Pay is accepted in 4 million shops and Venmo users can pay 2 million merchants in PayPal's network.

According to one survey, more than half of American consumers still prefer plastic to smartphones because of security concerns. The companies said they have taken steps to be secure. Apple doesn't store account information on its servers. Google said it encrypts personal information.

Still, vulnerabilities do exist. For example, Venmo in February settled with the Federal Trade Commission for misrepresenting privacy standards and enabling fraud through lax security measures. The company said it has since taken steps to strengthen the app's defenses.

However, the biggest problem for most users of mobile-payment systems is a dead phone.