A Tale of Two Wallets, Digital vs Traditional
Introduction: Digital vs Traditional Wallet
The word wallet used to have a finite definition. Wallets were simply an accessory, fitting snugly in a back pocket or within the confines of a purse, which allowed people to keep their payment methods accessible and organized. The biggest concern about owning a wallet was the threat of losing it. From vanished cash and compromised payment cards to the headache of replacing IDs, a lost wallet was the ultimate con of owning one.
But with the advent of mobile devices coupled with Apple Pay, Samsung Pay or Android Pay, the word wallet has taken on new meaning. Now it can also be an app on a smartphone that contains a user’s payment card information and lets them pay with the tap or scan of their device. It can expedite checkout, automatically send receipts, help manage budgets, and even streamline the use of coupons and retailer discounts. While the nuisance of losing a digital wallet can be equally stress-inducing, they also offer extra layers of security that traditional wallets cannot match.
While digital wallets are gaining traction, they haven’t yet displaced traditional wallets. Nor are the two mutually exclusive. So what compels a shopper to make the switch from a traditional wallet to a mobile wallet? And what fears do traditionalists have that they can’t overcome when it comes to mobile payments? Vantiv teamed up with iModerate to find out. This article shares results from a study of over 800 participants that use – and don’t use – mobile payments. Here’s a quick overview of what’s covered:
- Most respondents think that mobile payments are in their infancy
- Those who currently use mobile payments are driven by convenience
- Non-users are concerned about the security of mobile payments
- Respondents agree that mobile payments will become widespread in the future
This tale begins with a closer look at consumers that are already paying with mobile devices and what they perceive as their benefits.
The benefits of early adoption
In short, early adopters know that they are at the forefront of a new payment technology. Instead of rummaging around for wallets and waiting in long checkout lines, they have directly experienced the time savings and convenience of paying with their mobile devices. Here are some of the key benefits that users identify.
SPEED AND EFFICIENCY: Cashiers no longer need to complete transactions with time consuming payment methods. A quick scan or tap of a mobile device and the customer is on their way. Speed and efficiency are especially important to 25–34 year olds.
CONVENIENCE AND EASE: Mobile payments help simplify consumers’ checkout processes. Many already have their phones on hand, making transactions easily accessible and very convenient.
LESS HASSLE: Heavy bags and cumbersome wallets no longer weigh mobile payments users down. Adopters don’t have to carry cash and cards when they leave their homes, and their mobile payment methods are always accessible. In particular, 18–24 year olds are more comfortable relying on technology and find it important to be free of bulky possessions.
Here are some direct quotes recorded by the survey, which further highlight the benefits that users perceive:
“I have found that mobile payments are much more fast and convenient. It keeps me from having to carry cash and makes checking out less of a hassle.” – Female, 35-54
“Mobile payments, in my opinion, are a very convenient and efficient way of speeding up the process of payment. Some positive experiences that make me appreciate the ability to pay from my phone are when everything goes smoothly throughout the payment.” – Male, 25-34
“I find it a simple and convenient way to pay. It's nice to not have to dig out my credit card.” – Female, 25-34
As with any new technology, the benefits are accompanied by drawbacks as well.
The drawbacks of early mobile payment adoption
The benefits of adopting mobile payments include speed, convenience, and the ease of paying with mobile devices. But what happens when the process doesn’t go so smoothly?
Users feel annoyed and embarrassed when their mobile payments don’t work correctly, and women are more attuned to this feeling of embarrassment than men. Even though users know these glitches are part of being an early adopter of a new technology, in these moments they feel like cash or a credit cards would have been more efficient.
Here’s what the study discovered about the barriers and frustrations associated with paying via mobile devices.
TECHNICAL GLITCHES: Adopters regularly encounter technical barriers. These may include dead batteries, frozen phones or mobile payment apps, or technical glitches with the store’s checkout system.
UNINFORMED EMPLOYEES: Not all store employees are familiar with the different types of mobile payments, making it hard for them to smoothly conduct transactions or address problems.
INCONSISTENT AVAILABILITY: Not all stores or locations offer mobile payment options. Therefore, users can’t count on leaving traditional payment methods at home.
SECURITY: While most users believe that mobile payments are more secure than cards, a minority are concerned about the possibility of hacking or the personal information that could be stolen after losing a phone. However, this is a low-level concern that users think will be addressed over time.
Here are some direct quotes regarding negatives that users shared throughout the course of the study:
“The negative is sometimes my phone not working or the threat of it not functioning is so high.” – Female, 18-24
“Some cashiers are not sure what to do and I have to guide them through the process.” – Female, 25-34
“I like the convenience of using Apple Pay. However, I get frustrated with the lack of stores that are set up for it. It's so easy yet not being able to count on the store having it is a problem.” – Female, 35-54
“Sometimes there are technical difficulties using them at the cash register which gives me anxiety.” – Female, 18-24
So what about non-users? What barriers are keeping them from adopting mobile payments? And do any of them overlap with the negatives that early adopters are experiencing?
Non-users have security concerns
In short, non-users are most worried about the security of mobile payments. 25–34 year olds are more likely to feel vulnerable, which is understandable given that they’re trying to establish financial stability. For all users, though to a lesser degree for men, these hesitations impact their willingness to adopt mobile payments technology. Here are the Who, What, When/Where, and Why of their chief barriers and concerns as they relate to security.
WHO: 1) Themselves – might lose their phones; 2) Thieves – could steal their phones; 3) Hackers – might target stores and phones that are vulnerable; 4) Retailers – might not protect them from hackers
WHAT: They’re afraid their financial and personal information will be compromised if their phone is stolen or hacked.
WHEN/WHERE: Moments of vulnerability might include, 1) The moment they set up mobile payments; 2) Being on same Wi-Fi/in Bluetooth range of hackers; 3) When their credit card information is transmitted; 4) If a store is hacked post-purchase
WHY: Aside from accidentally losing their phones, non-users feel especially vulnerable because they are unable to protect themselves from most mobile payments risks.
Here are some thoughts that non-users shared throughout the course of the study:
“I feel like it isn't secure enough. I have had my Social Security number used by another person and it took years to get straightened out. If someone gets my phone they could possibly use my information.” – Female, 55+
“Identity theft and hacking to steal my info is my main concern, as sites are prone to hacking and cyber thefts often.” – Male 25-34
“With the advancing technology it seems as if technology is ahead of the security for that technology. I'd be afraid of someone taking my phone to pay for things as well as intercepting the data as I pay for items.” – Female, 18-24
But security isn’t their only hesitation.
Additional barriers to digital wallet adoption
Non-users only have a general familiarity with payments made via smart phones and don’t feel adequately informed about them. In addition, they don’t see mobile payments used around them and wonder how well they actually work. These factors, combined with their lack of pain around existing payment methods, reduces their motivation to adopt mobile payments. Here is additional insight into these concerns.
TRADITION AND COMFORT: Non-users are happy with the way they currently make purchases and that sentiment for coins, cash, and even credit cards makes them wary of society’s overall shift toward a technological society.
KNOWLEDGE AND MOTIVATION: Non-users mention a lack of understanding regarding how mobile payments work, with some (particularly women and those age 55+) believing that mobile payments mean online shopping. They are not interested in making an effort to be informed, reducing their motivation even further.
One participant shared this:
“I don't really have hesitations regarding mobile payments. I guess I'm just not very familiar with them. I use PayPal from time to time but am just not familiar with any other mobile payment methods. – Female, 25-34
So what’s the path forward for wider adoption of mobile and digital wallet payments?
The path forward
After exploring the benefits and barriers surrounding mobile payments adoption, the natural question is what’s next? For existing users, it’s about ironing out the wrinkles in the current process. And for people who aren’t yet using mobile payments, it’s about building trust and familiarity. Here’s a checklist of next steps for both users and non-users going forward.
What do users need?
Users need existing mobile payments to become even more streamlined and consistent. This can be achieved through:
- Smooth payment experiences: address technical issues before they occur and provide support when there are technical snafus
- Consistency: provide clear signage displaying which mobile payment options are available
- Security support: reassure mobile payments users that help is available in the event of a security breach.
What do non-users need?
Non-users need motivation to change their current behavior and adopt new technology. This can be achieved through:
- Statistics: use cold, hard facts to convince shoppers that mobile payments are just as secure (if not more so) than traditional payment methods
- Brands: raise awareness of brands that are currently using mobile payments and the success that they’re achieving as a result
- Growth: track the increasing use of mobile payments as an indication that people find them convenient and secure
There is no doubt that mobile payments will continue to evolve over time with the goal of breaking down barriers and increasing adoption.