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29pc of consumers would choose a smartphone over a wallet when going out: PayPal

June 3, 2013

Consumers are becoming frustrated with the limitations of cash, with 29 percent of Americans saying they would choose a smartphone over a wallet if they could only bring one item when going out, according to a new survey from PayPal.

The findings suggest that American consumers are eager to move to a digital payment future but that businesses are lagging behind, with 68 percent of consumers reporting that they have been unable to pay for something because they did not have cash. For 30 percent of Americans, this has happened frequently.

“The study talks about if you could choose one, which one would you take, your smartphone or your wallet, and almost a third of consumers told us they would leave their wallet home,” said Anuj Nayar, senior director of communications at PayPal, San Jose, CA. “That is significant – I don’t think it would have been that high just a couple of years ago.

“What this shows is that consumers in the five markets that we surveyed are all moving away from their reliance on their physical wallet,” he said.

“Consumers are now looking to ditch their wallets in favor of something digital.”

Solving shopping pain points
The key takeaway from the PayPal survey is that digital wallet services are not about replacing a consumer’s cash or credit card with a new payment method but about using technology to solve real shopping pain points.

For example, PayPal and Jamba Juice are giving customers in some stores a way to check-in and order ahead via the PayPal app.

As a result, users are able to pay for their order with a few clicks and a picture of their face on their smartphone or have their paid-for order waiting for them when they arrive at a location.

“Mobile is going to be one of the key devices that consumers use to shop in the future, but not the only one,” Mr. Nayar said.

“The problem that needs to be solved is not payments at point-of-sale,” he said. “The problem that needs to be solved is moving complexity that exists in our lives away from the consumer and onto the back-end with the technology.

“It is not about tapping your phone over swiping your credit card in-store, it is about having things like all of your gift cards automatically taken care of when you are at point-of-sale or even something as simple as managing all of your receipts so that they are easily accessible.”

Being wallet-free
The survey found that British consumers are even more enthusiastic about a wallet-less future, with 32 percent saying they would choose a smartphone over a wallet when going out.

Additionally, consumers across several countries wish they could leave their wallets at home.

The survey was conducted in the United States, Britain, Canada, Germany and Australia.

Key findings include that 86 percent of Americans wish they could leave their wallet at home, and 90 percent of Germans, 87 percent of Canadians, 80 percent of Australians and 76 percent of Brits said the same.

Additionally, 75 percent of Canadians say they have been unable to make a purchase because they did not have cash with them while only 57 percent of Germans said the same.

The beach topped the survey in every country as the place most people wish they could go without a wallet followed by the gym or when they are exercising.

Canadians were most likely to wish they did not need their wallet at a bar. Germans and Americans were most likely to wish they could attend concerts or sporting events without a wallet.

Other places named as places consumers wish they did not have to use a wallet to pay include the laundromat, grocery store, restaurants and parking meters.

Spare change
Digital wallets and other solutions can also help consumer solve other money-related problems, such as when a friend does not pay his or her portion of a bill – person-to-person payments can help here – or when consumers need to cash in their spare change.

PayPal is working with Coinstar on a solution that would help consumers convert their spare change into a PayPal balance at select Coinstar kiosks nationwide.

“These are some of the key consumer problems that we think mobile wallet can solve,” Mr. Nayar said. “The technology is there, but the merchants are just now starting to adopt.

“We think it is going to change very rapidly,” he said. “It is about saving consumers time and money.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York

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