Digital wallets are becoming more and more prevalent in the fintech world, but according to a recent survey of 9,600 by Market Force Information, they are not gaining much ground with the average consumer.
“Consumers are actually questioning the value [of digital wallets],” said Cheryl Flink, chief strategy officer for Market Force. “They want simple, easy, and digital wallets have become another thing they have to manage.”
Additionally, according to the study, more than half of the consumers polled don’t even know what a digital wallet is—a fact that would definitely put a damper on their popularity.
“But wait,” some of you are probably thinking, “PayPal is a digital wallet. Consumers love them!”
“Consumers don’t see [PayPal] as a digital wallet,” says Flink, adding that when asked about using what they did consider digital wallets, consumers “can’t see the benefits. They have security concerns and see digital wallets as very redundant.”
Fintech advisor David Gerbino, who serves as a member of the NYPAY Board among other things, said the lack of consumer enthusiasm could be due to a couple of factors, such as misunderstanding what digital wallets actually are.
“When we talk about digital wallets what are we talking about?” says Gerbino. “If you go into a Starbucks or a Dunkin Donuts, you can see digital wallets are hugely popular; [they] go across demographics.”
If one considers Starbucks a digital wallet then, yes, a specific type of digital wallet has been wildly successful with consumers. When it comes to NFC or point-of-sale wallets, Gerbino points out, not so much; especially if they lack the kind of brand loyalty people associate with Starbucks and similar offerings.
Gerbino also agreed with Flink in that the average consumer doesn’t really see the point of the product, primarily because those offering wallets are “not going out of their way to convince [consumers] of the value.”
“I’ve rarely come across a card issuer or ecommerce [company] that has gone out of their way to tell me the quickest way to check out,” Gerbino says; which brings up the next problem with digital wallets:
Once you actually figure out what they are, consumers have to figure out how to pay with one—or, if they can pay with one.
“When they go to pay, not every system will accept these wallets,” says Flink. “It’s a tech linkage issue; banks are [also] innovating to produce cards that act like digital wallets to just tap and pay.”
According to the Market Force study, consumers are becoming more and more comfortable with mobile banking: 77% of study participants reported that they had downloaded their bank’s app, a huge leap forward from the 12% who said so just two years ago.
So what does this mean for digital wallets? Taking off the fintech goggles for a moment, will digital wallet products eventually gain ground with the consumer or will they fade into technological obscurity?
“Banks are making sure mobile apps are taking the place of [independent] digital wallets,” says Flink; when asked if there was a chance that these apps or contactless pay could lead to the decline of digital wallets, Flink stated that “there is every possibility of that.”
To learn more about digital wallets, join us in Tel Aviv for Bank Innovation Israel this November 1-3.Register here.Like This Post