Mobile wallets: Moving from early adopters to followers

| by Kristen Gramigna
Mobile wallets: Moving from early adopters to followers

Though the Pew Research Internet Project says 58 percent of Americans currently have a smartphone, Horace Dediu, founder of market-analysis website Asymco predicts that 2017 will mark "the point of inflection" in terms their global growth. Similarly, other reports by Pew predict that smartphones as a mode of mobile payment could actually surpass cash or credit cards by 2020, marking a sizable opportunity for brands that have formed a foothold in the mobile wallet space in one way or another.

Although surveys like those conducted by mobile research and advisory firm Yankee Group indicate that the majority of consumers like the idea of mobile wallets, actual mobile wallet usage, and adoption, remains lackluster. The same study indicated that for all the self-reported interest in mobile wallets, just 14 percent actually completed a mobile transaction in the past three to six months. The Federal Reserve’s research tells a similar tale: Though smartphone owners who used their smartphone to complete a payment transaction grew from 6 percent in 2012 to 17 percent in 2013, actual mobile wallet usage pales in comparison to the Fed’s prediction that 42 percent of the smartphone-toting population will at some point become mobile wallet users.

So what’s stopping the masses from using mobile wallets — and what will it take to turn their interest into actual usage? Despite the excitement about mobile wallets in tech circles, the challenge may be more about how to communicate the benefits of it in a way the average consumer can essentially see, touch, feel — and believe — in order to move the new innovation past the period of education and awareness, and into adoption. Case in point? An August 2013 study from Vibes, commissioned to understand more about consumers and the mobile wallet, showed that though 85 percent of the smartphone users surveyed believe in the benefits of a mobile wallet, less than half were aware of any of the “non-payment” functions mobile wallets offer, like the ability to store digital coupons and travel tickets.

Likewise, retailers must solve an integral piece of the mobile wallet puzzle. Though Apple iPhone users may see the Passbook logo on their smartphone screens multiple times a day, for example, getting retailers on board to “fill in the blanks” about how to use a mobile wallet at the point of purchase has been a slow process. CashStar, maker of digital gift cards for a host of mega brands including Sephora, BestBuy and Dunkin Donuts, recently shared data that about one third of its digital gift cards are opened on a smartphone and that about 30 percent of those are added to the Passbook app — but the process isn’t exactly streamlined, or intuitive, to the average consumer. For example, some carriers have thwarted Google Wallet’s attempts at simplifying usage, while Apple and Samsung’s mobile wallets lack true integration with retailers own loyalty initiatives. Additionally, consumers are likely looking for signals on how the mobile wallet plays into the retail experience. In the August 2013 survey, for example, just 19 percent of those surveyed said they have seen any indication of its acceptance in a retailer; 59 percent said they would have a more positive view of mobile wallets if retailers started to deliver digitized content via the mobile wallet.

To convert early adopters into followers, mobile wallet providers will need to convince consumers of their viability as a new and superior form of payment by appealing to e-commerce security concerns: What happens to a customers’ mobile wallet if their smartphone is stolen, or breaks? How do they access the information stored in the wallet, and what is the level of liability to them if it’s breached? Lastly, why is this process superior to the current process if they don’t use a mobile wallet?

Photo courtesy of Thomas Abbs

Topics: Mobile/Digital Wallet, Trends / Statistics

Kristen Gramigna

Kristen Gramigna is Chief Marketing Officer for BluePay, providing retail payment processing solutions for merchants of all sizes. She brings more than 15 years of experience in the bankcard industry in direct sales, sales management, and marketing to the company and also serves on its Board of Directors.

wwwView Kristen Gramigna's profile on LinkedIn

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