by. Cyndie Martini
Rapid technology advancement, unprecedented innovation and a drive to win consumer share of wallet have placed a spotlight on the payments industry, and digital wallets (or mobile wallets or wallets) have taken center stage. Today, the digital wallet competitive landscape is a fragmented, rapidly evolving space.
Will digital wallets win over the consumer audience? Which players will be cast in the lead role, which will play the understudy? And where do credit unions fit in?
What Is a Mobile Wallet?
Like their physical counterparts, mobile wallets allow consumers to store preferred payment methods-credit cards, debit cards, bank accounts, etc.-on their PC, mobile phone or tablet. This technology lets consumers make purchases at checkout in a physical or online store without using their physical wallet.
Digital wallets are a hot topic in financial services-and with good reason.
According to a survey conducted by PayPal, "86 percent of consumers would rather leave traditional wallets at home in favor of a mobile alternative." Comscore's 2013 Digital Wallet Roadmap survey, "The Fast Lane to Driving Consumer Adoption," found that although there is great interest, more than two-thirds of the population still has concerns that will need to be addressed prior to greater adoption. Forty-seven percent of survey respondents rated security, safety, theft and loss of phone as the leading drawbacks to wallet use; 62 percent believed digital wallet technology seemed useful; and 29 percent had no concerns about the product.
Mobile Wallets and Interchange
In the current payments environment, many consumers don't really understand wallet functionality and security. Interestingly, the key denominator throughout Comscore's survey was that even though consumers demonstrated a decent conceptual understanding of wallets, they lacked clarity on key details-the security benefits of alerts, for example, or increased privacy-that could impact their intent to use a digital wallet.
