Receive the latest articles for free. Click here to get the Luxury Daily newsletters.
Only 12pc have used a digital wallet other than PayPalBy Chantal Tode
While there is significant potential for digital and mobile wallets, one of the main challenges for wallets other than PayPal continues to be gaining awareness among consumers, according to a new report from comScore.
The report, Digital Wallet Road Map 2013, found that digital wallets other than PayPal only had awareness among 51 percent U.S. consumers. PayPal also leads other wallets when it comes to consumer use.
“PayPal may have the highest level of awareness and usage, but that shouldn’t be much of a surprise to anyone,” said Andrea Jacobs, payments practice leader at comScore, Reston VA. “They’ve been around for well over a decade whereas the others are just within the last two years at most.
“Relatively speaking, the way we pay for items today really hasn’t changed a whole lot since cash and plastic came into existence,” she said. “Changing that kind of behavior won’t happen overnight, and I don’t see PayPal going away anytime soon.
“But having said that, better marketing and advertising of other wallets can only benefit these other players. To that point though, one of the findings of the study is that a one-size-fits-all model may not apply for all wallets when it comes to marketing and advertising.”
Mobile drives payment volume
Smartphones make it easier and more convenient for consumers to use digital wallets, which store a virtual copy of a the contents of a consumer’s physical wallet to facilitate online and offline retail transactions, as they can have access to them whenever and wherever they are.
Mobile is a key driver of PayPal’s digital wallet, with the company reporting that mobile payment volume in 2012 was up 250 percent for a total of $14 billion. In 2013, the company expects to do $20 billion in mobile payment volume.
In the past year, the number of wallet offerings has proliferated as smartphone adoption has grown, with many different companies now out there hoping to gain consumer adoption.
However, consumer awareness of these digital wallets still remains at low levels and consumers do not have a clear understanding of their benefits, according to comScore.
The report found that 72 percent of survey respondents were aware of the PayPal digital wallet followed by Google Wallet with 41 percent. Only 13 percent are aware of MasterCard’s PayPass Wallet, 8 percent Square Wallet, 8 percent V.me by Visa, 6 percent Isis, 5 percent Lemon Wallet and 5 percent LevelUp.
The numbers were even lower in terms of how many had used a digital wallet, with 48 percent of respondents saying they had used PayPal, 8 percent Google Wallet, 3 percent MasterCard PayPass Wallet, 2 percent Square Wallet, 2 percent V.me by Visa, 1 percent Isis, 1 percent Lemon Wallet and 2 percent LevelUp.
The study is based on research using comScore’s opt-in panel of one million U.S. consumers and two separate surveys of more than 2,000 U.S. Internet users.
The results point to the continued fragmentation in the digital wallet landscape because of low consumer adoption outside of PayPal, with only 12 percent of consumers claiming to have used a digital wallet other than PayPal.
However, the results also indicate that digital wallets could eventually reach one in two consumers as they become more aware of the offerings and educated on the benefits.
Security a concern
One barrier to use is that the concept of digital wallets is often difficult to convey and prone to misinterpretation. Even after respondents were asked to review the Web sites of specific digital wallets, they still scored an average of just 45 percent in terms of demonstrated level of understanding.
Another hurdle to greater digital wallet adoption is security, which remains a top concern among consumers.
The results show that even when security measures are available, digital wallet providers are not doing a good job of communicating that is availability to consumers.
The survey found that 93 percent of consumers would prefer to use a digital wallet that has to be unlocked before use. However, an average of just 57 percent of respondents across the brands studied realized – after having reviewed the digital wallet Web site – that this locking feature was available.
Some digital wallet providers were more successful than others in communicating the availability of this feature, with 71 percent awareness among Lemon website visitors versus 42 percent among LevelUp Web site visitors.
“Digital wallets have not yet gained mass adoption, but it has the potential to reach 1 in 2 consumers,” Ms. Jacobs said. “Our study demonstrates the linkage between intent to use a digital wallet and the degree to which they understand the product and favor the brand.
“It does so not just by asking questions, but by asking questions after consumers have a first-hand experience in getting to know the digital wallet products,” she said. “If marketing does its job well, people will both be aware and understand.
“Currently, consumers have a vague understanding but not a great grasp on the details. One important detail they don’t understand is security.”
Chantal Tode is associate editor on Mobile Commerce Daily, New York
Like this article? Sign up for a free subscription to Mobile Commerce Daily's must-read newsletters. Click here!
Related content: None Found leave a response, or trackback from your own site.