Smartphone popularity growth for consumer payments likely to continue to grow

More consumers are using smartphones as a transaction tool, and this could increase significantly in the coming months and years. This could eventually transform payments for merchandise to the point where both cash and physical credit and debit cards are phased out.

A total of 13 percent of consumers noted they paid for products with their smartphone, or watched someone do it, according to a poll from Harris Interactive. The recognizance of this technological emergence has many consumers expecting other forms of payment to become things of the past. More than 60 percent noted they expect smartphone payments to completely take over cash purchases, while two-thirds indicated they think credit and debit cards will also become obsolete.

However, this may not happen immediately. The poll found the total level of consumers who think this will happen in the next five years only totaled approximately one-third. Meanwhile, one-quarter of respondents noted the same thing about smartphones overtaking cash as an option.

The most likely groups to use these smartphone options as a primary way to purchase items are echo boomers, according to the report. A total of 40 percent of this group noted they would use the product, while one-third of Generation X said the same. Baby boomers were not as enthused by the prospect, as only 18 percent noted interest, while less than 10 percent of senior citizens said the same thing.

When looking at the country as a whole, more than 25 percent of Americans have some interest in making payments on their device, while nearly 45 percent of those with smartphones want to utilize the tool, the report said.

Additionally, some consumers would like to use a digital wallet, which would allow them to leave their actual wallets behind, the report explained. A total of 30 percent of all consumers were interested in this idea, while another 43 percent of those who use smartphones want this option.

These options may make some consumers better able to manage their credit overall, which gives them the potential to lower the chances of needing a credit fix from overusing their options at hand.

Many consumers may struggle to improve personal credit situations
The credit issues many consumers faced in recent years may be subsiding to some degree, as there could be a drop in credit card delinquency rates next year.

The level of credit card delinquencies were slightly higher than usual this year, but the figure will likely remain at a low level next year, according to a report from TransUnion. Delinquencies should be at 0.87 percent by the end of next year, the report found, which is a slight uptick from the 0.83 percent projected for the final quarter of this year. During the fourth quarter of 2011, the figure was 0.78 percent.

"It should be noted that we have seen credit card delinquencies drift somewhat higher in the last year," said Steve Chaouki, group vice president in TransUnion's financial services business unit. "Some of this can be attributed to the fact that credit card delinquencies were so low, that at some point they were bound to increase. A more significant factor may be that credit card originations have been increasing in the last few years, and with that increase we have seen non-prime borrowers receive not only more credit cards, but also comprise a larger share of new credit cards."

Nearly 40 states, as well as Washington, D.C., are forecast to see increases in delinquencies in the next 12 months, the report explained. The highest jumps in delinquencies will likely be in Ohio, Missouri and North Dakota, with every figure rising 7.5 percent or higher.

Another six states will see declines in their figure, including Rhode Island, Montana and Georgia, the report noted. All three of these states should experience a drop of more than 5 percent.

Outstanding consumer credit card debt increases in October
While delinquencies declined, the level of debt taken on increased this autumn. Consumers experienced a jump in credit card debt during October, as the figure rose to $2.75 trillion, according to the Federal Reserve.

Revolving debt jumped more than $3.3 billion in October, which was more than the nearly $2.2 billion drop in debt in September, the report added. Despite the increase, there was still three of the past five months where the figure dropped.

While some consumers are settling their credit issues on their own, others may still be struggling with these problems. If this is the case, consumers may benefit from looking for a credit repair law firm like Lexington Law to help them fix their credit score.