There’s no way around it – mobile wallet adoption rates have fallen short of lofty expectations over the past few years. But thanks in large part to enhanced capabilities, functionalities and offerings, that soon may change. In fact, nearly one in four Americans – including 44 percent of millennials – who do not use a smartphone or mobile app payment, are likely to start using a mobile payment app within the next 12 months. Some of the industry’s most successful mobile wallets are already experiencing an uptick in adoption rates. In late October, CEO Tim Cook announced Apple Pay transaction volume increased 500 percent from the previous year.
But while digital wallet adoption has been met with skepticism from many consumers, developing innovations and capabilities of today’s mobile wallets will continue to drive digital payments. Here’s a look at how improving security, implementing more opportunities for engagement and incorporating loyalty, will lead more mobile wallets providers to enjoy similar success.
Security concerns have had a serious effect on consumers’ willingness to pick up a mobile wallet at point of sale. In fact, our recent study found that nearly half (47%) of all consumers haven’t completed a mobile transaction in the past year because of security and privacy concerns. That’s why mobile wallet developers are taking steps to enhance security measures sooner rather than later. From host card emulation (HCE) to biometric security tools that use body parts to authenticate transactions, mobile wallet providers can implement heightened security measures to both gain and retain users on their platform.
In order take advantage of this opportunity, retailers are already looking for ways to make mobile wallets a bigger part of their business. According to a report by consultancy firm Ovum, 81 percent of retailers say payments are a clear part of their business strategy, and half plan to offer mobile payments in the future. Still though, more than 65 percent said they were concerned about identity theft, stolen customer password details or chargebacks. With heightened security measures, retailers can help put such concerns to rest and begin integrating mobile payment technology into stores.
Engagement beyond payments
Consumers are demanding more ways to utilize their mobile wallets beyond payments. And digital wallet providers who create new opportunities for consumer engagement – such as linking to boarding passes, IDs and tickets, to targeted marketing offers and promotions – will win the battle against slow adoption and inactivity. Some brands and retailers have even started using mobile wallets to offer special incentives such as coupons or extra loyalty points for making a purchase. These new offerings could lead to a big boost in business for retailers. According to a recent mobile wallet engagement survey, 67 percent of U.S. respondents say they’re more likely to visit a retailer if they receive coupon expiration reminders when they’re close to a store.
But regardless of what engagement opportunities brands and retailers come up, consumers won’t waste their time with a mobile wallet app that’s difficult to navigate. In a market where convenience always comes before brand loyalty, creating a seamless user experience is the only way to ensure shoppers keep using the app.
Incorporating loyalty and rewards
Loyalty programs are used by a majority of today’s consumers. In fact, the number of loyalty program memberships in the U.S. has increased 26 percent from 2013 to 2015. Enabling consumers to earn and burn miles, points and rewards by making payments with a mobile wallet is an easy way for providers to drive engagement and raise their perceived platform value, especially when it comes to millennials. We even found that nearly all (94%) of consumers would use mobile wallets more often if they could redeem loyalty rewards. By offering the convenience and ease of access to loyalty programs that they’ve come to expect, mobile wallet providers can increase engagement with tech-savvy, connected millennials.
Mobile wallets haven’t lived up to the hype in recent years, but that certainly hasn’t dampened expectations moving forward. It’s predicted that more than half of the U.S. population will give mobile payments a try by 2020. The reason? Improved capabilities among mobile wallets. From stronger security measures to more engagement opportunities such as loyalty, mobile wallet providers are taking steps to win over consumers that have strayed away from mobile wallets in the past.
Danielle Brown is the VP of Marketing at Points, the global leader in loyalty currency management. Via a state-of-the-art loyalty commerce platform, Points provides loyalty eCommerce and technology solutions to the world’s top brands to enhance their consumer offerings and streamline their back-end operations.