While fewer people are carrying cash, and the ubiquitous use of mobile devices has given rise to an especially high awareness of digital wallets, consumer usage of digital wallets remains low.
These are among the key findings of our recent 2014 Digital Wallet Usage Study, which was conducted via an online survey of more than 2,000 U.S. smartphone, tablet and desktop users a few months ago.
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, both on the digital-wallet provider side and at retailers, a significant opportunity 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. On-the-go females represent a strong target demographic for digital wallets, given that 71 percent carry less than $30 in cash, compared with 54 percent of males. Meantime, nearly 60 percent of digital wallet users are male. Additionally, three out of four consumers who don’t carry any cash are under the age of 43.
As for the types of digital wallets used, females ages 18 to 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, such as paying bills and looking up information. With these stats in mind, marketers can operationalize their consumer demographic usage profiles and purchase patterns, and, thus, extend their monetization opportunities through digital-wallet payments.
Another study finding showed that the majority of digital wallet transactions are via mobile (60 percent), and that three out of four transactions amounting to less than $10 are conducted weekly via a mobile phone. These types of purchases are most commonly of coffee, drinks, retail items, games, books, and groceries. Given that the mobile industry continues to see consumers relying more on their devices for everyday activities, the potential for increased mobile-driven sales via digital wallets is clear.
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 for 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 (three) than infrequent users (one).
Today, the digital wallet space is very fragmented, with many players focusing on different areas without a clear market leader piecing everything together. But 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 innovative ways to demonstrate value and transform current consumer behaviors.