Are consumers ready for digital wallets?

Editor’s note: Richard Snoxell is the research director for Marketing Sciences, Winchester U.K. This is an edited version of a post that originally appeared here under the title “Mobile Wallet: It’s not about the payments.”

Since 2011 we have been monitoring consumer sentiment toward digital wallets. In this year’s study we also look at features that drive appeal, concerns that could hinder take up – and which brands the U.K. consumer would trust as providers.

Now usually referred to as mobile wallets, a PIN protected app on your smartphone will hold digitized versions of your loyalty cards, vouchers, payment cards and travel card. Further into the future some might even hold your building access cards and ID card(s), although I think Passport Control will still prefer to see the original for a few years yet.

So, as an overall concept, does it have appeal? The answer is a resounding yes – and that appeal is broader than you might imagine.

We found that 66 percent would be “open to using mobile wallet” on their phone. As you would expect this varied by age, with the sweet spot amongst 25-to 44-year-olds (75 percent interest) – due to a likely combination of tech confidence allied to a desire to shop smartly as they start earning and spending more; both for themselves and their family.

Interestingly we also found that 50 percent of the 65+-year-old smartphone owners we surveyed also expressed openness to the mobile wallet concept. This is encouraging for a technology service and should serve as another reminder that older consumers should no longer be stereotyped or ignored as a legitimate customer group when it comes to mobile or digital services.

Contrary to what some might think interest is not being driven by mobile payments but by the lure of digitized loyalty cards and vouchers. Consumers can easily imagine the benefit of freeing up space in the purse or wallet by leaving all those loyalty cards and paper vouchers at home.
The loyalty card feature is also appealing because there is little or no perceived risk from using mobile wallet in this way – it’s a win-win. And these two features have the best chance of helping mobile wallet with crossing the chasm from niche to mainstream as they appeal to a much wider group than mobile payments.

It will not necessarily be about who is first to launch a full wallet service, but who can do it in a simple and easy way, ideally giving users control over payment limits and with reassuringly visible (but not complex) security. And for tech brands –clear backing from a finance brand.

It goes without saying that no provider will gain traction without support from the retailers and although the near-field communication (NFC) payment technology should work with existing contactless payment readers these still need to be rolled out more widely.

However, as important as being able to use mobile wallet in store will be its promotion by confident, informed staff and positive word of mouth – that old fashioned human element.

It will be very interesting to see how the myriad providers slug it out in the coming wallet wars of 2014 and 2015. as Along with the financial institutions, we will be keeping a close eye on developments from WEVE and the networks, Google Wallet’s next iteration (and U.K. launch) and of course Apple, when they enter the fray with a full offer.

So, tell me – who’s your money on?