Last year was going to be the year of mobile wallets. Then, it was moved to 2013. Recently, experts have postponed the technology’s day in the sun yet again.
What’s happening with mobile wallets? Why aren’t they living up to expectations? Here is everything you need to know about the mobile payment trend.
Mobile wallet payments are growing.
Payments made in the US via mobile technology tripled between 2011 and 2012 to reach $539 million. eMarketer projects mobile payments will hit $1 billion this year and then increase rapidly to over $50 billion in 2017.
But growth is below expectations.
While those projections look big, they are roughly half of what eMarketer estimated a year ago. In fact, a range of experts, including Gartner, have recently scaled back their digital payment forecasts for the coming five years.
Experts are also rethinking how consumers will use mobile wallets. The vast majority of current mobile payments are for small ticket, routine items, specifically coffee at Starbucks. Forecasters now think it will take longer than anticipated before mobile wallet technology is used for significant purchases.
The early adopters are, well, early adopters.
Roughly 6% of smartphone owners have used their device to make a payment. The consumers currently using mobile wallets are exactly who you would expect. Men represent 67% and the vast majority is 25-34 year olds with incomes over $150,ooo and consider themselves tech savvy.
Consumers are concerned and confused.
There are a number of significant reasons why consumers are not flocking to mobile wallets. First, awareness is far from universal. Only about 50% of consumers with smartphones even know about the technology.
Over 70% of those aware have concerns, the majority of which relate to security. Consumers worry about everything from their account being hacked to losing their phone and thus their digital wallet.
Consumers are confused. There are more than 10 different digital wallet apps, lots of new acronyms (NFC anyone?) and too many product features to keep straight.
Retailers aren’t really helping.
US retailer adoption of digital wallets has been slow. They are not sure how digital payments help them or which options to support. As a result, they aren’t educating consumers about why virtual wallets are better than a credit card or old fashioned folding money.
The future remains bright.
Mobile wallets haven’t gone mainstream yet, but they most likely will in the future. When consumers understand more about the technology and are reassured that it is secure, they are likely to be won over by its ease, convenience, and potential to save them money.