Within the past week Google, PayPal and Amazon have all made moves in the “mobile wallet” arena. Amazon
launched an Android-based mobile wallet app, focused on loyalty and gift cards. PayPal updated its iOS app to enable the addition of loyalty cards. Google updated its Wallet app to include the ability to add gift cards or send and receive money from friends.
Apple is also reportedly in talks with credit card companies ahead of a potential mobile wallet launch this fall that would allow in-store payments. Apple currently offers this capability in Apple stores, through its Apple Store app.
Despite all this activity there’s relatively little going on in terms of actual consumer adoption of what I refer to as “horizontal” mobile wallets. A new Digital Wallet Usage Study from Thrive Analytics (based on a survey of more than 2,000 US adults), found a significant gap between consumer awareness and usage.
Nearly 80 percent (78 percent) of survey respondents said they were aware of “digital wallets” (PC + mobile). However only 32 percent had actually ever used one. This includes PayPal on the PC. People are thus making conscious decisions not to use them for the time being.
Resistance to digital wallets surrounds payment security and the lack of any compelling reason to use them. For example, after security concerns, the second most common reason cited for not using them is, “it’s easier to pay with cash, debit or credit cards.”
Those in the industry have long said that simply replacing a plastic card with a digital version wouldn’t by itself motivate consumer adoption. That appears to be true.
However credit card payments via mobile apps (e.g., Uber, Fandango, Starbucks) are happening in greater and greater numbers. These are “mobile wallets” too but they’re embedded in the background, in a larger context (transportation, entertainment, coffee) and they’re necessary to the entire experience.
It’s interesting that Uber or Starbucks app users don’t seem to worry about security. Moreover the payment aspect of Uber — you just get out of the car — is one of the things that makes it so compelling.
Among the 32 percent who say they’ve used a digital wallet, PayPal (mostly on the PC) has the greatest reach, followed by Google Wallet, Groupon and Apple Passbook. Mobile carrier backed ISIS doesn’t appear on the list.
Roughly 64 percent of Thrive Analytics survey respondents who used digital wallets reported that they did so at least monthly, with 33 percent using them weekly. Among the weekly users, Apple Passbook is used most often (60 percent), followed by Google Wallet (49 percent) and PayPal (40 percent). Thus the most engaged digital wallet users are mobile wallet users.
Below are the product/service categories and the breakdown of transaction values, according to the survey. Roughly 80 percent of transactions fall below $40 and more than half are worth less than $20.
The report says that the lower-value transactions are done primarily via mobile and the majority of higher-value transactions are conducted on a laptop. Accordingly, “75 percent of transactions less than $10 are done weekly via a mobile phone.”
If Apple does introduce its rumored mobile payments app later this year it could be a game-changer for horizontal mobile wallets. However somewhat under the radar mobile payments continue to gain and grow incrementally via utilitarian apps that simply store credit card information to remove friction from mobile transactions.
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