My friend, a long-standing iPhone user, is the perfect example of today’s typical consumer. I asked him whether he had Passbook. He said yes and showed me his app, but also said he had no idea what to do with it.
It isn’t exactly intuitive. It’s sort of like giving a 2-year-old a bicycle without training wheels: The bike is too big for him. He needs to start with an intermediate step: the tricycle. And he needs adult supervision.
Any time a new technology is released, there is a period of education, awareness, and adoption. That is the period in which mobile wallets currently exist. Mobile wallet technology and the consumer must grow up together.
In the first part of this mobile wallets series, I looked at the history of the technology and current in-market solutions, such as Passbook (“the leather”) and Google Wallet (“the plastic”). In this blog, I will look at who is currently using mobile wallets and in what capacity. I will also explore some of the challenges that are slowing widespread adoption of mobile wallets.
Profile Of The Early Adopter
The people who are using mobile wallets today have adopted the technology before the masses. According to “The Mobile Wallet Shift: Non-Payment Opportunities for Marketers,” this group represents one in five, or 20 percent, of consumers. The majority (80 percent) of consumers still have not seen, touched, or used a mobile wallet. In the first survey of its kind of 1,000 smartphone users, Vibes found that, as a whole, mobile wallet users are evenly distributed across income levels and that they come from every region of the United States. That same research concluded, “Smartphone users are eager to try mobile wallets for way more than making payments. The need and demand for the non-payment side of the mobile wallet is clear.”
So why aren’t people using mobile wallets?
Near-field communications (NFC) and contactless mobile payments have not had the sort of take-off that was predicted at the beginning of 2012. Following are a few of the main challenges that currently hinder mobile wallets’ widespread adoption among the laggards.
Are Mobile Wallets Accepted In Stores?
Well, sort of.
When I hold up my phone for the cashier to either scan the bar code or manually input the loyalty card number, I sometimes get a strange look. When I first opened my Google Wallet, only 12 preloaded partners (or organizations) were in the Loyalty Program area. I had to manually input cards that I used frequently, such as Panera and CVS.
In “Consumer Intelligence Series: Opening the Mobile Wallet,” PwC notes, “Many consumers say they want widespread acceptance of mobile wallets at places like retail stores, gas stations, doctor’s offices and restaurants, and by law enforcement agencies, before they will leave their traditional wallets at home.” Although most organizations continue to be laggards in adopting mobile wallets, some industries are demonstrating a higher than average adoption rate. Supermarkets and fast-food chains, for example, are seeing the “the biggest growth in people using contactless mobile payments” because these are places where speed is a top priority. Other popular places of use include cafes and restaurants.
As retailers and organizations provide more opportunities for consumers to use mobile wallets, the comfort level of consumers will grow. This will, in turn, facilitate more trust and further adoption of this technology across a broader base of consumers.
How Will Mobile Wallets Be Kept Private And Secure?
With the release of the iPhone 5s and its fingerprint scan capabilities, it seems like a natural transition for the iPhone 5s to become a safe haven for a mobile wallet. How much more secure can your mobile wallet be if it requires not a four-digit passcode but your fingerprint, which is unique to you among this world of more than 7 billion people? PwC notes that a large percentage of consumers are interested in high-tech protection measures “such as requiring fingerprint identification technology in order to gain access to the mobile wallet.”
Google Wallet currently requires a four-digit passcode to unlock the wallet. It also takes you through quite a security process in order to verify your identify. This process entails a series of questions about your personal history while tracking your response time. The process was both interesting and a bit unnerving. My mobile wallet “knows” what car I have parked in my driveway as well as the name of the street I lived on 12 years ago. If this isn’t a prime target for identity theft, then I don’t know what is.
I must admit that this makes me a bit nervous, perhaps in the same way users felt swiping their new debit cards when paper checks became passé. As with any technological shift or change, it will take some time for users to get comfortable. It will take hundreds of successful uses before consumers come to trust that their identities will not be stolen, their bank accounts will not be drained, and their lives might actually be made simpler before we will see more widespread adoption of the mobile wallet.
Conclusion: Are You Ready For Google Play?
In the meantime, we can encourage businesses, organizations, retailers, and point-of-sale vendors to create apps and other features for brick-and-mortar stores that enable mobile wallet early adopters to be the “test users” on our behalves. As they test, we can wait and see how it goes. Or if you’re feeling brave, you can go to Google Play today and get a mobile wallet for yourself. If you do, send me a note and let me know how you like it.