Digital wallets appear to be so compelling – simplifying life for the customer (check), always present (check), location marketing (check), loyalty and rewards (check), multiple payment types (check), digital delivery (check) adoption…hmmm, not so good.
So why are consumers not flocking to the promised land of Apple Pay, Android Pay and other digital wallets?
Well they are…sort of. You have to look to China to see the promise of a wallet fulfilled, where Alipay has left its humble payment origins behind and now moved into smart cities. It lines up alongside the lifestyle platform WeChat; as well as shopping, paying bills and taxes with WeChat Pay, you can also schedule hospital appointments, order a taxi, apply for a visa or file your taxes. The numbers are staggering: according to this article by The Drum, 420 million people used WeChat to send 8.08 billion “red envelope” digital payments over Chinese New Year alone, almost double the transactions that PayPal had during the whole of 2015. But China is a special case – born straight in to a digital world, wallets arrived without legacy, without competition. Head back to the West and you start to understand some of the challenges – highly competitive markets, fragmented providers, disintermediation fears from banks and card issuers, trust issues from consumers – it’s just not China.
But that is changing. The steady flow of wallet launches drives customer awareness, compatible devices fill the market, biometrics alleviate the security concerns – the opportunity to use a wallet is growing, and the benefit grows too as each new feature is added. Wallets give companies rich data, change the way they can offer services, reach their customers and deliver compelling digital experiences. Even shopping itself is changing in digital wallets’ favour; the small screen is playing an increasing part in the path to purchase and wallets, which ease the payment process, have an important role to play.
The phony ‘Wallet War’ is over. We have been waiting for some time; now things are finally heating up and some decisions need to be taken. The tech giants have all declared their hands – Apple Pay, Android Pay, Samsung Pay – meanwhile established wallet providers like PayPal have announced NFC adoption. Banks and retailers are launching their own wallets, and this is before you begin to list out the efforts of the fintechs.
They all want to serve your customers.
So, how can digital business executives both seize the opportunity and cope with this growing threat, in a fragmented, confused marketplace? My colleague, Thomas Husson, and I have just published a report on Digital Wallets, the latest in our series on Digital Disruption in Financial Services, which sets out the current landscape, our predictions and advice on building a strategy to address this challenging, complex ecosystem.
Critical mass may seem like a way off – but to meet this disruption and prosper, you need to put your strategy into action now. To get Forrester’s view on the state of the digital wallet landscape, the main players and how you can outsmart them, clients can read a copy of the report here.