Amazon’s first attempt at its own mobile wallet application, designed for use at the point-of-sale, has made a quiet debut on the Amazon Appstore and on Google Play. However, the current implementation of the new “Amazon Wallet” application is fairly barebones – it doesn’t yet support mobile payments or the ability to store credit cards or debit cards. Instead, the wallet only offers the ability to store and organize your gift cards and other store and loyalty cards. (TechCrunch)
This comes as no surprise as Amazon now joins Apple, Google, PayPal, Visa, and a host of others, who have all tried for years to bring the idea of a digital mobile wallet to fruition. In an ideal world, a digital wallet would provide an enhanced shopping experience with seamless, loyalty integration, offer redemption, and shopping tools. Many companies have struggled with consumer adoption for a variety of reasons:
Security Concerns and Other Payment Options
According to our most recent study on digital wallets, conducted on 2,000+ consumers, security concerns remain the main barrier to adoption (46 percent), followed by lack of usability vs. credit cards/cash (37 percent) and not being top of mind as a form of payment at the time of purchase (32 percent). However, when we look at the data broken out by age usability becomes increasing more important for younger generations. The study also shows younger generations (18-29) are the ones that use digital wallets the most (43 percent). What this indicates is consumers are not seeing the added value to using digital wallets. It’s too easy to use other forms of payment such as debit and credit cards.
Market Fragmentation/Technology Deployment
Another reason consumer adoption has lagged is that many of the digital wallet players are offering their own stand-alone solutions, fighting to “own the customer.” These standalone efforts require partnerships that cut across the commerce and payments value chains and that address both consumers and merchants at scale. Without partnerships, these providers cannot scale consumer adoption.
For Example- Starbucks and Dunkin’ Donuts opted to forge their own path with mobile payments technology. When Starbucks launched its app in 2011, NFC had a very limited presence on handsets in the market, leaving mobile barcodes as the only viable option for initiating a mobile payment. Similarly, Dunkin’ Donuts chose mobile barcodes for payments because it allowed its app to be available to as many guests as possible.
Both chains used an existing loyalty card program familiar to consumers instead of trying to introduce a new payment method and new program all at once. The companies also used a branded mobile app that included features beyond just making payments, such as finding nearby locations. These choices not only provided complete control; they offered the ability to leverage the power of each brand to drive downloads and use.
Although these companies found early success with their technology choices, the landscape is in a constant state of flux.
Will Amazon Prevail?
Consumers clearly indicate the need to trust wallet providers, given the level of financial information shared. But consumers also demonstrate a need for new sources of value in order to change their current behaviors, requiring real innovation in solving unaddressed consumer problems. Only time will tell if Amazon can be the winner.