The Case For Forward-Looking Digital Wallet Providers
Every year, more and more people utilize digital wallets to store credit card, debit card, and even store loyalty card information on their smartphone, wearable, or another mobile device. Mobile wallets allow users to quickly and easily make purchases in-stores and online, withdraw cash from ATMs, and send money peer to peer-giving them greater flexibility and convenience in payment choice.
Mobile wallet use is steadily growing. In fact, in-store mobile payments are expected to top $500 billion by 2020. Here, we’ll examine some of the reasons digital wallets are gaining popularity.
The greatest roadblock to mobile wallet use is the lack of awareness of this type of service, where it can be utilized, and how it’s accepted. According to Accenture, the majority of consumers (52%) claim to be extremely aware of mobile payments-up nearly 10% from last year. Because more and more people are aware of the service today, it is naturally gaining in popularity.
Digital wallet providers are using social media, traditional marketing, and other resources to spread the word about the benefits of mobile wallets. It seems to be working.
A study from MasterCard tracked 3.5 million social media conversations about new forms of payment and discovered that over 75% of those conversations were about digital wallets. In other words, awareness of digital wallets is growing.
Not only are more people aware of digital wallets, more locations and websites are accepting them as a form of payment. As more and more consumers become aware of and begin to use mobile wallets, merchants are naturally beginning to see the benefits of accepting mobile payments.
One of the biggest reasons mobile wallet adoption is on the rise are the options they give to consumers. There are two main types of digital wallets: single purpose and multi-purpose.
As you can imagine, single purpose wallets are branded apps that work for one use only. This can be a store app that combines loyalty programs, gift cards, and other options. It can also be a credit card app that only offers one choice in form of payment.
Multi-purpose mobile wallets allow users to store a number of different credit cards, debit cards, gift cards, loyalty cards, and more in one wallet. These wallets attempt to replicate physical wallets by offering a number of options.
Users of multi-purpose wallets are able to store all their payment information in one convenient digital wallet. Choosing which card they want to use or accessing their loyalty account right from their phone or wearable device.
Digital wallet providers are giving users more options for digital payment. More options translate into greater popularity and use.
The incredible growth of mobile shopping (mCommerce) is having a definite impact on mobile wallet popularity. Online shopping, often referred to as eCommerce, is a force in US retail sales. According to BigCommerce, 95% of Americans shop online at least once a year.
While eCommerce is steadily growing, official census data estimates that around 15% growth from the previous year, mCommerce (mobile shopping) is expected to explode by the end of the decade. Business Insider forecasts mCommerce to make up 45% of the total eCommerce market by 2020, up from 11% in 2014.
So, why would the growth of mobile shopping have an impact on mobile wallet use? The answer is integration. Mobile wallets allow users to make easy, quick payments without entering their credit card information into a website.
Digital wallets allow consumers to make quick payments on mobile devices by choosing the appropriate app on checkout. Modern shoppers want an all-inclusive shopping experience and that includes payment.
Shopping cart abandonment can be minimized with a seamless, easy checkout process. Mobile wallets integrate seamlessly with mCommerce allowing shoppers to make a payment without ever leaving the website.
Of course, one of the biggest reasons for the increase in popularity of mobile wallets is youth acceptance and usage. A study conducted by Alcatel-Lucent discovered that over 80% of youth showed a strong interest in using mobile wallets.
Furthermore, a recent study showed that 64% of 18-25 year olds use a mobile wallet to make some purchases. Even more striking is that the same study revealed that nearly half of young people believe that physical money will be phased out over the next 20 years.
This means that mobile wallet providers have a built in customer base in the next generation. Young people already see the benefits of mobile wallets and are adopting them as a preferred form of payment.
Larger mobile wallet adoption amongst young people reinforces the indication that mobile wallet popularity is more than a trend-it’s the next logical step in digital payment.
Security, Flexibility, and Convenience
Ultimately, the greatest reasons for the growing popularity of mobile wallets are the benefits of increased security, flexibility, and convenience.
Digital wallets offer consumers greater security. From biometric authentication to the ability to lock a lost or stolen phone, mobile wallets provide better security. Some mobile wallet providers require a selfie to authenticate payment, while others require biometric authentication like a fingerprint to make a purchase.
These security features are much harder to break than using a lost or stolen card. What’s more, if a physical wallet is lost or stolen everything inside is lost—cash, IDs, payment cards. If a mobile device is lost or stolen the phone and digital wallet can be locked to avoid unauthorised use.
Finally, people don’t want to carry around a bulky wallet with a bunch of credit cards, debit cards, and loyalty cards. Mobile devices neatly carry all the information needed to shop, giving users greater flexibility and convenience.
The Future of Payment
Mobile wallets are gaining popularity for a number of reasons-they give users greater flexibility and convenience, offer better security, and are easy to use. As more locations and websites accept mobile wallets we’ll only see the continued popularity and use of digital wallets.