Mobile wallets: In a lull or never really a thing?
With the annual Money20/20 conference in Las Vegas barreling toward the industry this Sunday, now is a good time to take the temperature of what's going on in mobile payments and digital wallets at this point in 2017.
Are we in a lull?
This might be the case, at least according to a joint study from JPMorgan Chase and Forrester Consulting.
The companies concluded that both consumers and merchants are taking a break from adopting digital wallets as they wait for the "next wave of progress."
When it comes to consumers, the study describes them as being in varying stages of exploring mobile wallets. The so-called power users are ahead of the curve. The key to widespread adoption will be to convince light users and non-users about the benefits of mobile wallets.
As for merchants, they are in the process of making technology and infrastructure investments for the next wave of digital opportunities, according to the study.
While the research makes a solid case for a so-called lull, one could argue the industry never really got mobile wallets off the ground to begin with outside the initial launch hype.
Even the study's own numbers support such a view.
The percentage of consumers that prefer to pay with a mobile wallet actually went down a percent to 14 in an eight-month period between October 2016 and June 2017.
Those results are based on answers from 1,500 U.S. consumers ages 18-plus who go online at least weekly. While that's a small sample size, never mind the general wariness the industry has about how such studies are conducted, any kind of decrease in this area should be a cause for concern.
But what exactly are providers doing about it?
Consumers are giving companies the blueprint for a useful mobile wallet, but most providers are ignoring them, at least for now. This particular survey lays out features consumers would like to have in a mobile wallet and it's nothing we haven't heard before: order ahead and pay; self-service pay-at-the-table; the ability to use coupons and redeem rewards directly from the digital wallet; and VIP experiences, just to name a few.
Now, we do find some of these features in retail-branded mobile apps that are capable of facilitating a payment. But when you look at the popular Pays, not all of them provide such experiences.
Will there ever be a time when I can open Samsung Pay and order a coffee from Dunkin' Donuts without accessing a separate app to do so? Is the merchant giving up too much control in that situation?
Another area worth mentioning from this study is security.
One of the biggest misconceptions consumers have about mobile payments is security. It's something that comes up again and again. And it's a complicated issue in some respects.
On the one hand, we know encryption and tokenization help to alleviate concerns about mobile payments security. But the industry has not done a good job putting those things into layman’s terms for the average consumer.
On the other hand, consumers have concerns about device security. Malware threats are a continuous problem, particularly on Android. Mobile wallet providers can talk about tokenization all they want, but consumers will not store sensitive financial information on a smartphone if they believe the device itself can be compromised via malware.
In the end, the industry needs to remember we're still in the early days of mobile wallets despite whatever progress we've seen in the past couple of years. Many pundits continue to point to the year 2020 as to when we'll see a true tipping point, and that could still be the case.
Meantime, consumers and merchants will continue to experiment to find the best value for mobile wallets.
Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.