Digital wallets and mobile payment apps are on the minds of consumers—whether it be Apple’s Passbook, Google Wallet, PayPal or Starbuck’s mobile app. While the ubiquitous use of mobile devices has given rise to an especially high awareness of digital wallets and fewer people are carrying cash, consumer usage of digital wallets actually remains low. These are among the key findings of our recent Digital Wallet Usage Study, which was conducted via an online survey of more than 2,000 U.S. smartphone, tablet and desktop users in June.
Results showed that nearly 80 percent of consumers are aware of digital wallets—an extraordinarily high stat—but usage remains fairly low at less than one-third. Security proves to be the main barrier to widespread usage, followed by lack of usability in comparison to cash and credit cards, and not being top of mind as a payment option at the time of a purchase. This situation offers senior marketers a significant opportunity, both on the digital wallet provider side and for retailers, to proactively educate their audiences on the benefits of the digital wallet shopping experience and to support digital wallets as a form of payment to encourage adoption.
Additional study results showed that demographics play a key role in digital wallet usage, especially when combined with the fact that fewer consumers are carrying cash overall. On-the-go females represent a strong target demographic for digital wallets as 71 percent of females carry less than $30 in cash, compared with 54 percent of males. Additionally, three out of four consumers who don’t carry any cash are under the age of 43. What’s surprising is that nearly 60 percent of digital wallet users are male, despite carrying less cash than females. As far as the types of digital wallets used, females aged 18-29 tend to use merchant apps such as Target, Macy’s and Home Depot, while males gravitate more toward discounts/coupons and price shopping. Males who do use merchant apps are mostly engaged in browsing and service related activities like paying bills and looking up information. With these stats in mind, marketers are poised to operationalize consumer demographic usage profiles and purchase patterns and thus extend their monetization opportunities through digital wallet payments.
Another finding of the study showed that the majority of digital wallet transactions are mobile (60 percent) and that three out of four transactions amounting to less than $10 are conducted weekly via a mobile phone. [pullquote align=”left|center|right” textalign=”left|center|right” width=”45%”]Digital wallet purchases are most commonly coffee, drinks, retail items, games, books and groceries.[/pullquote] Given that the heaviest digital wallet users are on mobile and that the mobile industry continues to see consumers relying more and more on their devices for everyday activities, the potential for increased mobile-driven sales via digital wallets is enormous. As such, marketers and retailers that accept digital wallet payments will likely reap the benefits of demonstrating their investment in more mobile-friendly payment options.
As far as the leading providers, the top digital wallets used are PayPal (79 percent) Google Wallet (40 percent) and Apple Passbook (17 percent) with Google Wallet leading the large transaction pack with purchases of $30 or more (35 percent). However, Apple Passbook leads the way as far as usage on a weekly basis. The study also showed that 70 percent of digital wallet users take advantage of one or more digital wallets at least monthly, and daily digital wallet users tend to use more types of digital wallets (3) than infrequent users (1).
Ultimately, the digital wallet space is currently very fragmented with many players focusing on different areas without a clear market leader piecing everything together. As the market evolves, we expect to see more companies working to educate their customers on the value of using a digital wallet, optimizing their mobile merchant apps and/or partnering with businesses to secure the necessary equipment. However, proper demographic targeting is also needed to increase consumer adoption and wallet share. To be successful in the digital wallet market, marketers will need to develop new innovative ways to demonstrate value and transform current consumer behaviors, such as seamless loyalty integration, redemption options and helpful shopping tools.