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Driving adoption of mobile wallets: convenience isn’t enough

Driving adoption of mobile wallets: convenience isn’t enough 2017-05-26T02:22:26+00:00

Mobile wallet providers made a huge push to acquire users this past holiday shopping season – encouraging consumers to manage card payments through a smartphone app. As an example, Google Wallet offered a compelling incentive by promising users $5 for each person they referred who signed up. Smartphone users could refer up to 20 friends (earning up to $100), while their referred friends also received a $5 gift.

Google Wallet

An optimistic study from VentureBeat projected that 30% of U.S. users would adopt the mobile technology for the holidays. But the jury (and the data) is still out as to whether gambles like this worked.

A customer experience quandary: Convenience vs. peace of mind

It’s not surprising that the large players in this new arena have been having a hard time building a customer base. While these providers may be focusing hard on technical capability and device support, consumers are weighing the emotional pros and cons. In the age of sophisticated identity theft, loading all one’s highly confidential payment data onto their phone is no small decision.

Sure, it sounds appealing to access mobile wallet convenience from any device, and it’s handy if your favorite merchants support it. But many customers have valid concerns about privacy and security, and many merchants are still not equipped to accept mobile wallets. In the VentureBeat study, 69% of smartphone users said they weren’t sure which stores would accept the type of mobile payments they use.

The buy-in bottom line

  • The two early drivers of digital wallet tech, Google Wallet and Square Wallet, are still seeing slow adoption. Google has a market awareness rate of 31%; yet only 5% of those aware actually use it. Square achieved awareness of 15% among U.S. mobile phone users, yet only 2% of those used it. (Forrester report, September 2014)
  • Despite Apple Pay’s much touted superior security and ease of use, merchants remain slow to adopt it. Apple Pay accounts for less than 10% of all point-of-sale terminal purchases. (Forrester report, October 2014) Cost is a big obstacle as merchants need to update equipment, and for now they just don’t see clear benefits in accepting mobile payments over cards.

Gaining traction with “native” mobile wallets

Starbucks is the leading example of mobile marketplace success with 16% of its total transactions in the U.S. occurring via mobile —or nearly
7 million transactions per week.

Source:
“US Mobile Payments Forecast, 2014 To 2019”,
Forrester, Inc. November 17, 2014

For Google and Apple, their mobile wallet success may be largely dependent on merchant adoption—which they can’t control. And that’s created opportunity in the digital wallet space for merchants themselves. The difference? Companies like Starbucks and Macys have honed in on the customer experience, and transferred it to the wallet.

The Starbucks “native” mobile wallet is an app customers can install on their phone and use in stores. Like Google and Apple, they offer coupons and customer-tailored content. What differentiates Starbucks is that they already know their customer base, and know how to please them.

Starbucks Wallet

Macy’s My Wallet is another good example of a seamless customer experience from store through mobile. It allows users to store coupons and offers, calculates savings at checkout, and even applies their selected offer immediately at checkout.

Starbucks and Macy’s have figured out how to amplify customer loyalty by enhancing the in-store experience through mobile engagement. Google, Apple, and Square could learn a meaningful lesson here – it’s about more than providing a service; customers and merchants will need to see clear wins on how the digital wallet experience makes their life easier and better.