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A New Era in Wallets: The Migration from Physical Wallets to Digital Wallets



Whether you carried it in a handbag, backpack, or your back pocket, a wallet has been a fixture in human society for centuries to carry paper money, checks, and plastic debit and credit cards.

Then, we add to the physical wallet the personal identification card like a driver’s license and all the other cards we now have - like loyalty and membership cards that are slotted into that physical wallet. Together, the wallet becomes a system for organizing and accessing all the payment methods we now use on a daily basis.

The only downside to a wallet has ever been the concern over possibly misplacing it in some way, like on the seat at the restaurant, at your mother-in-law's (who you know would never go through your personal stuff -- or there is having it stolen.

With the additional item that now dominates our pockets or handbags – our smartphones – the wallet may also seem to feel a little inconvenient.

Our mobile devices are proving their worth even more by offering a way to essentially put our wallets on our phones and leave the physical wallet at home collecting dust.

Enter the digital wallet -- a way to store all payment and personal information while also providing for a tap or scan payment system on all purchases. Other features of a digital wallet include the ability to speed the checkout process, send and store receipts, manage budgets, and collect and store coupons and retailer discounts for future use.

While there is still the risk that you could lose your digital wallet if someone takes your mobile device or you misplace your phone, unlike physical payment cards there is greater security through additional layers of protection that should ease your stress should this happen.

Despite the cool and convenient factors that come with digital wallets, there has yet to be mass adoption. Physical wallets are still with most of us. Yet, some have made the switch from physical wallet to digital wallet, so what makes them feel compelled to do this while others still prefer the traditional payment channel?

This ebook provides insights to what drives some to adopt digital wallets and what scares others to stick with their physical wallets.

Included in this ebook are reasons why some believe mobile payments aren’t for them, and includes why others believe-in mobile payments. The ebook also addresses thoughts to consider about the primary concern mobile payments, and the viewpoints about where mobile payments are headed.

Let’s start with the mobile payment users who believe in the benefits of what digital wallets offer them.


1: Mobile Wallet Early Adopters: Perceived Benefits and Motivations

There are specific reasons why some people become early adaptors of things like mobile wallets. This group simply wants to have and use the latest technology. Most have grown up in an age where technology has dominated their lives so they are accustomed to just adopting whatever new developments are launched for commercial use as soon as they become available.

They tend to be more trusting of technology in general and like experiencing the benefits that are offered. This thought process is reinforced when they try out a mobile wallet because they soon directly experience the benefits, including efficiency, convenience, ease of use, time savings and more.

As more technology develops, this early adopter group will always advantage of the beneficial experience from this mobile wallet technology and apply it to those solutions, continuing their first adopter behavior.

These perceived benefits of mobile wallets have become real benefits:

  • Mobile wallet users and the retailers that accept these payment methods enjoy fast transactions because of the quick tap or scan that is used to complete the payment process. This speed and efficiency is valued by users of all ages, including those who aren’t users but are standing in line behind someone that does use their mobile wallet! Perhaps this may be the motivation that some need to become mobile wallet adopters.
  • Since the checkout process is simplified with the scan or tap method of digital wallet payment, it’s considered more convenient.
  • Since a smartphone is already on hand, it makes sense to move all payment information to it, providing you with one less item that you really need to carry or hunt for during the transaction process. This means less hassle and things to consider when leaving the house and traveling.
  • The idea of not having to carry cash also means less concern over theft as many consumers feel like pulling out cash in front of others makes them vulnerable. Less "stuff" to carry.
  • Taken altogether, these benefits create a fast, pleasant, and efficient way to take care of purchases so that you can move onto other things in your busy life.

While it sounds great and so beneficial that it makes it seem impossible to believe why anyone wouldn’t want to use a mobile wallet, the fact is there are plenty of consumers out there that have yet to even consider adoption.

The next chapter of this digital wallet covers some of the barriers to mobile wallet adoption.


2: What’s Holding Some Back from Mobile Wallet Adoption?

The best way to explain why some people don’t want to make the switch from physical wallet to digital wallet has to do with technology and certain fears.

Everyone can agree that technology is pretty great when it works, however, when it doesn’t work, it’s horrible.

If there have been any situations where mobile wallets haven’t worked or have led to security issues, data breaches, and theft, many people take this as proof and their primary reason for not adopting the increasingly acceptable mode of payments.

Yet as with all people from the beginning of time -- all adoption of technology has been met with suspicion. That first old guy at the outpost in the west who accepted money instead of furs -- took a terrible risk. And, what about the necklaces being sold? Coins and paper that is unusable -- shivers. Yes, they felt like they took an awful risk.

This idea of technology going wrong is also quite common in the early stages of adoption. The result could be that some people may find their technology may not work while in a store.

Think back to when you first had to swipe a card at the grocery. And, now the chip. When trying to make a purchase with new technology you may have to contend with the embarrassment of other shoppers wondering why you can't put the chip-end of the card in the slot provided. But, so be it -- we'll all get used to technology has it evolves.

Beyond the technical glitches that will occur at first - like maybe you didn't charge your phone and you are standing in line with a dead phone, frozen phones and mobile payment app problems, there are other reasons why, some have mention, they have not being an early adopter of digital wallets. But, no worries, we will all figure it out:

  • No one likes using new technology where the others that also have to be involved in the process of putting it to work - don’t know how to use it or are unfamiliar with what it does. Many retail stores have yet to properly train their staff on how mobile payments actually work, so this can cause transactions to slow right down to the point that the shopper might as well of just used a traditional payment method.
  • Since consumers have yet to widely adopt the new, the same goes with retailers. This inconsistency as to where you can use your digital wallet means you still actually have to carry that physical wallet just in case you come across a store or location that doesn’t offer digital wallet capability.
  • Security concerns may continue to be the largest roadblock to digital wallet adoption despite much information being made to available to explain the significant layers of security that has been added to mobile wallet apps.
  • The biggest worry is a phone being lost or stolen and how can a person protect their mobile wallet from being opened and used should this happen.
  • Other security concerns involve hackers that target stores and the lack of confidence in retailers and their ability and willingness to protect their financial and personal information due to previous data breaches. This perceived vulnerability is enough to stop some from even considering a digital wallet.

For some non-users of digital wallets, there are even more barriers to adoption as discussed in the next chapter.


3: More Barriers to Digital Wallet Adoption from Non-Users

There are other reasons provided by non-users on why they don’t want to migrate to digital wallets. Primarily, this lack of adoption relates to some familiarity but a lack of experience seeing mobile wallets being used around them. As with the swipe card machine and now the chip-card, the lack of use then breeds more questions than it does establish a comfort level for these non-users.

Additionally, the other type of payment methods that have been used still work well - so mobile wallet non-users don’t see any real motivation to change - yet.

It’s that old adage of “if it ain’t broke, then don’t need to fix it.” While this is true for the majority of consumers who are still fine with carrying paper money, coins, and credit and debit cards -- don't try writing a check.

Lastly, knowledge about what mobile wallets and payments really are stands as a barrier yet to be understood by many and may take some time to remove. This is especially true among certain demographics like those over the age of 55 -- with many still thinking mobile payments are actually about online shopping. And, even if this demographic were able to easily get information that would better inform them, these non-users really are not interested in changing how they perform payments.

Numerous trends in 2016 have provided some hope that wider adoption of mobile wallets will come in the near future. In looking back on 2016, Mobile Payments Today noted some key trends about mobile payments that are critical to the bigger pictures associated with stimulating mobile wallet adoption:

  • Banks and retailers want to get involved in the mobile payment experience. Many launched a payment feature within their mobile apps, including Kohl’s and Wal-Mart, while Chase Pay and Citi finally entered the mobile payment arena.
  • Since safety and ease remain as two critical barriers to digital wallet adoption, some recommendations include using machine learning to help consumers shop smarter based on what they store in their mobile wallets and provide fraud alerts to reassure them.
  • Market fragmentation continues to also serve as a barrier so payment industry leaders need to continue working toward a universal payment platform rather than have these payment systems linked to hardware technology or manufacturer.
  • Retailers like grocery stores are now working and testing technology that turns the mobile wallet experience into a complete checkout system that could revolutionize the shopping experience and take the concept well beyond just using it for payments.

"Mobile Payments Today," also offer some insights into 2017 trends that could definitely provide a way to further encourage digital wallet acceptance:

  • The publication noted that, “using NFC technology, mobile wallets will exceed consumer expectations for convenience in 2017. With all the major players in the mobile device industry having delivered their own version of the mobile wallet (e.g. Apple Pay, Android Pay, Samsung Pay), and Apple Pay alone reporting a growth of one million new users per week, this technology will continue to convert users in the coming year.”
  • The on-demand economy will continue to grow, which means consumers will become more comfortable with using their smartphones to purchase items, track status, receive updates, and facilitate pickup. As more people start to enjoy the on-demand experience, more will also migrate to mobile payments and digital wallets.
  • With the use of Bluetooth set to rise through widespread consumer adoption in 2017, this will encourage more people to work with mobile payments and digital wallets. The confidence in Bluetooth security will provide a major shift toward mobile payments.
  • As more people begin to use the digital assistants on their mobile devices and become comfortable with the idea of receiving alerts and notifications from them, they will also start to connect the dots and be more inclined to use mobile wallets. They may even let their digital assistants buy items for them at some point.

Overall, these trends work towards the same end: getting consumers to use and rely on their smartphones more. What follows from that will be a natural progression toward an understanding of the value of storing payment and personal information on the smartphone so that payments can be easily handled.

All it takes is a few tap and pay experiences, and consumers are sold on the idea. These trends for 2017 will only further facilitate that good feeling about paying through a smartphone.


Conclusions about Switching Wallets in the Digital Age

Mobile wallets are gradually gaining acceptance, but there is a long way to go. In order to generate a wider adoption, specific strategies will be important to implement for both first adopters and non-users as the mobile payment environment continues to evolve.

For first adopters of mobile wallets, you don’t need to convince them of their value, but what you do need to achieve is a consistent and efficient usability level.

This means:

  • Continue improving the payment experience that addresses any technical issues that have arisen in the past and offers ongoing accessible customer support;
  • Ensuring you broadcast your acceptance of mobile wallets wherever you work with customers; and
  • Focusing on continually upgrading security features and share information about the additional layers of protection.

For non-users, merchant may experience greater challenges in convincing the older demographic of the benefits of migrating to mobile wallets.

However, in creating your strategy, center your tactics on what might motivate other demographics -- especially your true and loyal customers.

This includes:

  • Supplying quantitative statistics that illustrate the value of digital wallets and highlight the high level of security they offer;
  • Raising awareness about the well-known brands and retailers that accept mobile wallets as a payment method; and
  • Sharing insights about the number of people that continue to adopt mobile wallets to appeal to their sense of security and need for social acceptance.

To learn more about how Due can make a mobile wallet more accessible for your customers and help you breakdown the barriers noted in this ebook, contact us today by visiting

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