Why Mobile Wallets Need To Evolve

Mobile Payments

Mobile Payments

There’s still a high chance that you, dear reader have not used a mobile wallet, and do not intend to start using one in the near future. There’s also a small chance, albeit a smaller one, that you have absolutely no idea what mobile wallets actually are.

Nevertheless, the market for mobile wallets (and the mobile payments that go in an out of them) is growing from year to year, and according to Gartner, it’s expected to reach $720 billion in transactions by 2017, which is astounding considering the industry was valued at only $235 billion two years earlier.

So for those of you who either aren’t all that familiar with how mobile wallets work or plainly have no idea what a mobile wallet is, here’s the deal. A mobile wallet is a digital wallet you use from your mobile phone.

While each brand of digital wallet will have its own unique features, they more or less work like this: You upload your cards into the digital wallet app, then, when you’re in a store at the POS, open the payment app, select the card you want to use and tap your money into oblivion. It works in a similar fashion to paywave, but instead of using your bank card you use your mobile device.

The Current Mobile Wallets Landscape

Mobile Wallets

As it stands, only 13% of US adults have a digital wallet, which many say is an artificially high figure, which is inflated because some new smartphones already come with a digital wallet inbuilt. And 76% of the small slice of adults who do have a digital wallet installed say they have not used it to make a purchase from a retailer in the past 30 days.

Of those who do have digital wallets, 38% say they see no value in making the transition away from credit cards. All in all, people either don’t know enough about the technology, are scared to use it, or simply see no value in it.

All this begs the question: Is it inevitable that digital wallets will become the normal manner in which we pay for things? Or, is it simply just a new tech trend destined to be thrown on the ever growing pile of obsolete tech innovations?

New trends can take over within the blink of an eye. It wasn’t all that long ago that we were using brick-sized mobile devices to simply call and send text messages. Then the iPhone 3 came out and all hell broke loose!

You could even make a case for the evolution of digital wallets through Internet dating. Yes, I know, a little left-field but think about it: Not that long ago Internet dating was still taboo. People were saying 'don't waste your time'. Then Tinder came along and suddenly Internet dating is not just socially acceptable, it’s the norm. Now it's a multi-billion dollar industry and one of the fastest growing tech trends

I certainly see the future of digital wallets, but for the most part, human beings hate change. For this new technology to take off, I feel some big organisations will need to get involved and almost force the technology into the palms of consumers.

The Major Players

NFC Payments

For the iPhones out there (only the 6 series + Apple Watch at this stage) we’ve got Apple Pay, which can be accepted at roughly 700,000 retail locations; in Australia, however be warned: Apple Pay is currently only available to those boasting an Amex.

Last year (that’s 2015, to be clear) Samsung acquired a company called LoopPay, and is now called Samsung Pay, and it’s available on all the latest Samsung phones.

Because Samsung Pay is compatible with standard magnetic stripe terminals, it’s already available at over 30 million retailers worldwide, and it’s expected to be one of the frontrunners in the mobile wallet space.

Google Wallet is another of the big three, and it’s available on select NFC-enabled smartphones. There’s one caveat to the Google Wallet, however; it’s now been split up and linked into Android Pay. (What's the difference between Android Pay and the new Google Wallet? Find Out Here).

Overcoming A Few Hurdles

Smartphone Security

It all sounds pretty great, but of course, there are issues with the digital wallet that need to be overcome before it really starts to sink its teeth in and disrupt consumer behaviour.

For one thing, as is the case with any new technology (especially one that deals directly with money/bank details), there are massive security concerns. It is absolutely crucial that these mobile wallets are demonstrably safe and secure to use. Technology can be hacked, and online bank accounts have certainly been hit by hackers before, but bank cards and cash are typically deemed a safer option for the most part. Whether they actually are or not I will leave that up to you, the problem is that with media scrutiny surrounding some of the latest bank hacking efforts, consumers are scared to completely embrace mobile payments.

The other huge issue and possibly the most import point of all, mobile wallets need to be both easy to use and widely accepted. There is no point in developing technology that can't be used globally, from the smallest corner store to the largest multi-national organisation. The biggest appeal for mobile wallets is their convenience. Remove that and you have a technology that could possibly create more headaches than it cures.

Digital Wallets Of The Future

Digital Wallets

With all this hoo-ha surrounding mobile wallets, you can place a safe bet on that Google, Apple, and Samsung are going to meet a lot of competition for the mobile market pie in the coming years. On that note, this year PayPal bought Paydiant to create their own brand of mobile wallet and set foot inside the DW battlefield.

Starbucks offers a Starbucks-exclusive mobile wallet that’s already seen a great deal of success despite the fact that its payment system is limited exclusively to Starbucks shops.

Amazon and even various banks are also in the process of developing (and in Amazon’s case, tweaking), digital wallets of their own.

Soon the market will be flooded, with the companies that respond quickest likely to come out on top. The question is, What do they need to do in order to win the race for our cash?

The answer is simply this: a) demonstrate that they are safe to use, b) make using them super easy, c) ensure they are compatible with existing rewards and loyalty programs and finally, d) actually provide clear and useful incentives to make the switch.

It’s probably too soon to tell how this landscape will take shape, but if you’ve got any thoughts or predictions you’d like to share, we’d love to hear them.