Consumers like mobile payments, not mobile wallets
Last year, Forrester predicted the U.S. mobile payment market will reach $90 billion by 2017. Given the popularity of mobile transaction apps like Square, PayPal and the recently launched Amazon Local Wallet, you'd think consumers would eat up the mobile wallet idea. But, no, it hasn't turned out that way at all.
There are plenty of apps on the market that allow users to store loyalty cards, gift cards and even credit and debit card information. Mobile banking apps are offered by nearly every major financial institution and most credit card institutions offer apps as well. Yet, Google Wallet fell flat with consumers, PayPal digital wallet is underutilized by its own customers, and there's not a lot of excitement over Apple's rumored release of an e-wallet as part of the next major iOS update.
According to a white paper by payment processing company TSYS, one in five smartphone users have a mobile wallet installed on their phone but usage reflects only 1.2 percent of the total transactions made by U.S. consumers in 2012. The biggest issue? Security, of course.
"It turns out that even in the age of social networks and over-sharing, consumers are worried about the security and privacy of mobile wallets, according to a 2013 study by PricewaterhouseCoopers (PwC). People trust storing their loyalty cards and discount coupons in a mobile wallet, but when it comes to money or digital house keys, they will take a big step back, the PwC report says. Their main concerns are theft and loss of access, such as when their phone loses battery power or hits a technical glitch. They also do not want their mobile carriers knowing what they are doing with their funds," reads an article from the technology department at the Wharton School of the University of Pennsylvania.
At a time when reports of financial security breaches occur on an unnervingly regular basis, getting customers to buy in on the idea of mobile wallets appears to be an uphill climb. Then again, debit cards were met with an enormous level of suspicion when banks first began issuing them. Fingerprint ID and other types of highly individual-dependent types of security are being built into commonplace technology these days it's a fair assumption that it's precisely that type of technology will finally break down the barrier to widespread use of mobile wallets in the not-too-distant future.
- read the TSYS white paper (reg. req.)
- check out the article at Wharton's website
- read the Forrester report
Amazon Local Register aims to lure retailers away from Square, PayPal
Survey: Convenience driving consumer interest in NFC-based mobile wallets