October 10, 2017
Digital wallet adoption paused this year but the state of smartphone adoption and a growing number of digital-wallet “power users” have the technology poised to leap ahead, according to a new report from JP Morgan and Forrester. Between October of 2016 and June of 2017, researchers found the number of consumers who prefer to pay with digital wallets like PayPal, Apple Pay, Visa Checkout and others actually ticked down from 15 percent to 14 percent. The number of consumers who said they are likely to use a digital wallet in the next 12 months, however, went up a notch (from 39 percent to 41 percent) as did the number of merchants that accept digital wallets (36 percent to 37 percent).
Among consumers who the study identified as “power users” or “light users” of digital wallets, order-ahead-and-pay and self-service pay at a restaurant are the features that would entice users to choose digital wallets over other payment methods. For “non-users,” the most likely incentive would be if providers can convince them digital wallets have more and better security features than cards.
For large merchants, the report identified cost as the most cited reason they would not add a digital wallet option, whereas small merchants most often said their customers were not asking for it (although cost was a factor for those merchants, too). Despite those concerns, however, merchants are looking at the growth in “power users” and have come to understand consumers in general are heading toward demanding digital wallets as a payment method.
“As merchants work through bringing both themselves and their customers over to the digital wallet side, they see the opportunity for both operational efficiency and customer engagement,” the report’s authors wrote. “Both small and large businesses rated the ability to be more efficient with faster checkout as the most appealing benefit in accepting digital wallets. Balancing that was their second most appealing benefit—meeting their customers’ demands for a better shopping experience. With their eyes on the next phase, merchants are busy prioritizing mobile efforts.”