The future of cash payments has been a hot topic in the payments and fintech industry for quite some time now. Over time, innovators have created a number of alternatives for consumers to use as payments in their daily transactions. However, mobile payment adoption has grown slowly and consumers have not become completely comfortable with card-not-present- transactions. Despite the challenges, creating a digital wallet that consumers will use has been a focus for many brands. While digital wallets have remained a topic of discussion, very few players in the payments space have been successful at providing a digital wallet solution that sticks.
Our increasingly mobile society naturally gave way to the desire for convenient ways to shop and spend money. Since the average consumer is already accustomed to carrying little to no cash, the “virtual wallet” seems like a simple and logical solution. The early introduction of mobile payments with smartphones and NFC, such as Apple Pay and Samsung Pay opened the doors for further innovation in the mobile space. Now, retail chains and financial institutions alike are developing their own proprietary wallets for download and usage. These wallets continue to evolve from just methods of payment to fully integrated ecommerce and banking platforms, some even storing loyalty and rewards data.
In more recent years, businesses all over the world have released their versions of a mobile wallet app. Many of these organizations abandoned the efforts after some time due to low consumer adoption and/or difficulty creating the ideal technology. Still, fintech professionals haven’t given up hope and despite reluctance, mobile wallet usage is on an upswing. From 2014 to 2015, usage increased over 50%.
While the long road to widespread acceptance of mobile wallets might lead some to believe that consumers are generally objected to the mobile payments trends. However, studies show that demographics make all the difference when considering mobile wallet download and usage. A survey by Thrive Analytics showed that Millennials are more likely to embrace mobile payments after 3 out of 4 people under 40 reported that they carry no cash at all. In addition, the survey found that 60% of all mobile wallet users are males.
Creating, launching and maintaining a mobile wallet application is not easy. The organizations that decide to offer the technology to consumers are committing a great deal of time and effort into trying to make it work. There are several key challenges to mobile wallet acceptance:
- Alleviating customer fear
- Developing a desirable user interface and experience
- Maintaining data security and PCI compliance
- Competing with ecommerce shopping and developing integrations
- Continuously changing consumer habits and expectations
- Merchants who don’t have the right technology to accept mobile payments
Even after creating the latest and greatest in mobile wallet technology, companies are left with the difficult task of marketing the product to consumers and getting them to buy in fully. In a technological world where the average consumer is always looking for the next best thing, a company’s best bet is to air on the side of innovation and keep working to optimize their mobile solution. As the mobile wallet adoption rate continues to rise, fintech and payments organizations should always be thinking of the best way to create secure, reliable, and user friendly mobile wallets.