Mobile Wallets and Consumer Positioning
Over the past several years, consumers have had the opportunity to try a number of different so-called, digital and mobile wallets resulting in varying degrees of actual uptake and usage. These wallets offer a range functionality including storing payment credentials, to enabling retail point of sale (POS) transactions, to allowing access to loyalty cards and offers, and supporting mass transit ridership. While there is no common definition of what a wallet is or what it does for a consumer, most providers have come to settle on a few key selling points.
First Annapolis recently examined the value propositions from several leading wallets by observing the customer messaging and documenting the common elements (see Figure 1).
Figure 1: Digital Wallet Consumer Value Proposition
The wallet providers backing these offerings are a disparate lot, ranging from the largest wireless phone network operators (backing Isis) to the leading payment networks (Visa’s Checkout and MasterCard’s MasterPass). The offerings themselves range from developmental (MCX) to 3rd and 4th generation offerings (Google Wallet, PayPal, and Level Up). Despite this diversity, all providers share a common message around convenience and security, with some convergence around faster checkout and saving money with offers. From here, we examine two questions:
- How well does the promised consumer value proposition match up with the actual service offering?
- Does the consumer value proposition align with what consumers want in a digital / mobile wallet?
Looking at the first point, the central value proposition most wallets focus on is convenience, security, and offering coupons/deals. Regarding convenience, wallets generally allow users to store cards in one location for use at the POS or remotely and to store or get access to digital receipts. However, actually using wallets at the physical POS generally requires more steps than using physical cards, and some wallets have a restriction on card types that can stored. For security, wallets make a better case with PIN protection for access to the wallet and remote wallet disablement, but otherwise wallets generally rely on existing card issuer security. Finally, while several wallets allow users to digitally store offer and loyalty account credentials, consumers have limited redemption options (i.e., the service has not reached mass adoption with merchants).
We examined two recent consumer-facing surveys that looked at ranking services and features on mobile devices to examine how well wallets address consumer preferences.1 The following items ranked highest: stopping fraudulent purchases, digitizing paper items, instantly viewing transactions, and organizing smartphones. These findings indicate that customers do value security and convenience, but account access and organizational elements rank higher than other wallet provider value proposition elements such as offers or P2P payments.
So what should wallet providers do? The payment networks and players like PayPal, not surprisingly, are focused on meeting current consumer expectations, i.e., enabling easier and more convenient payments. Visa has recently rebranded and refocused its offering, shifting from V.Me to Visa Checkout. The new offering focuses exclusively on the remote channel (PC, tablet and mobile), enabling users to store any payment card and expedite payment at participating retailers by entering a username and password. PayPal, arguably the digital wallet with the highest consumer adoption level, has a similar offering and is expanding to bolstering in-app purchasing (e.g., opting to pay with PayPal using Uber). This focus on enabling payments first via the remote channel rather than offering a complete end-to-end solution including POS payments, offers, transit, etc. may resonate better with consumers who are increasingly looking to this channel to make purchases. Delivering a simple and easy remote payment offering advances the digital wallet value proposition, likely expanding consumer adoption. This service will be helpful in laying the groundwork for future utility expansion, including mobile payment at physical POS.
1 TSYS 2013 Consumer Payment Choice Study, “Survey Question: Please rank your interest in the following services if they were available on the mobile phone that you carry” and Vibe 2013 Mobile Survey, “Survey Question: Which mobile phone feature would benefit you the most?”
For more information please contact Jeff Crawford, Manager, firstname.lastname@example.org, member of Deposit Access Practice, specializing in Debit and Prepaid and Mobile/Alternative Payments.
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