Apps like Apple Pay and Google Pay have seen early adopters ditch their physical wallet in favour of a mobile one — but is this trend a flash in the pan? Or should retailers everywhere start to cater for this payment method as it verges on the mainstream?Well, by examining GlobalData’s annual Banking and Payments Survey, we’ve zeroed in on the numbers surrounding mobile wallet usage to find out. The survey was carried out in Q1 of 2019 and involved over 43,000 consumers aged 18+ across 38 separate markets.
Here’s what we’ve learned about consumer attitudes, behaviours and concerns regarding mobile wallets across Germany, Belgium and the Netherlands.
What Are Mobile Wallets?
Mobile wallets store digital versions of credit and debit cards on a smartphone or wearable device (such as a smartwatch) to be used as a faster, secure payment method. Sometimes called digital wallets or e-wallets, they’re also used to store loyalty cards, gift cards, concert tickets, boarding passes, and more.
How Do They Work?
Mobile wallet technology mostly relies on Near Field Communication (NFC).
NFC allows a smartphone to communicate with a payment terminal without the need for physical contact. Small amounts of encrypted data are securely exchanged between the devices via radio waves.
When a consumer is ready to pay, they simply authorise their payment using biometrics (fingerprint scan or facial recognition) or PIN entry, before waving their phone over the POS terminal. Payment is then taken from the nominated card.
Are Shoppers Using Mobile Wallets?
Of the consumers surveyed across Belgium, the Netherlands, and Germany, an average of 21% have a mobile wallet and DO use it. Around 10% have a mobile wallet and DO NOT use it, while a further 16% have heard of mobile wallets.
Furthermore, 23% of those questioned do not have a mobile wallet but WOULD be interested in getting one, and 31% do not have one and WOULD NOT be interested in getting one.
What Are the Main Barriers to Use?
Of the respondents who DO NOT USE mobile wallets:
● 34% simply do not like the idea of mobile payments;
● 25% aren’t convinced that it’s a better option than cards or cash;
● And 16% are concerned about what would happen if their phone was lost or stolen.
Other barriers include merchants not accepting mobile payments and mobile devices not supporting mobile wallets.
How Secure Are Mobile Wallets?
Security is a common concern when it comes to digital wallets. Interestingly, however, 16% of respondents who DO NOT use mobile wallets state that they could be convinced to try if it had better security features than a card.
Analysing this number further, we find that it’s largely the “Baby Boomer” generation (born 1946-60) and older (born before 1945) who need to be convinced.
This suggests that many older consumers are of the opinion that physical cards and cash are more secure than mobile wallets when the opposite is true.
Unlike cards and cash, mobile payments offer two distinct layers of protection:
1. Smartphone passcodes and biometrics are used to authenticate and authorise payments.
2. Whenever a payment is made via mobile wallet, a one-time encrypted version of the customer’s card is used, valid only for that transaction. This prevents hackers from intercepting sensitive financial information during a purchase.
This fact won’t be lost on younger consumers who will come to expect the option of paying securely with their smartphone — and the benefits that go with it.
What Are the Benefits of Mobile Wallets?
Beyond security, there are two clear consumer benefits to using mobile wallets:
● Convenience: With mobile payments, consumers won’t need to carry a physical wallet. Everything they need is in their phone. It’s one less thing to worry about.
● Speed: To pay, consumers only need to present their smartphone or wearable device. Compared to the time spent counting out cash or remembering then entering a PIN, transactions can be handled in seconds.
This is reflected in the data, with 21% of mobile wallet users surveyed stating that they find mobile more convenient than cash or cards. 17%, meanwhile, like the idea of not needing to carry cards or cash, and 12% admit to simply enjoying using their phones to pay.
Note: Another benefit of mobile wallets is that they don’t have the same limits (daily usage or maximum transaction cost) as contactless cards, because the user can verify their ownership with a smartphone PIN. This came to be important during the Covid-19 crisis of 2020, because people could make high-value purchases on their mobile devices, and didn’t need to use the PIN pad for large grocery shops.
How Does Accepting Mobile Payments Benefit Merchants?
Merchants who accept mobile wallet payments can expect benefits too. For example:
● Increased sales: By offering your customers their preferred method of payment, you can increase conversion rates, both online and off. Plus, early adopters of mobile wallets spend twice as much as those paying with other methods.
● New customers: Consumers will come to expect mobile payments as an option. Demonstrating that you’re moving with the times and keeping up with trends could convince them to choose your business over a competitor.
● Reduced costs: With e-receipts, you can minimize (or remove altogether) the costs associated with paper receipts.
● Enhanced loyalty and engagement: Loyalty schemes and rewards cards can be a difficult sell, especially when it means one extra piece of plastic for the customer’s wallet. But when it’s a digital card “slotting” into a digital wallet? That’s different. With NFC technology, you can integrate your customer loyalty schemes into mobile payments.
And these rewards programs can also be used to gather valuable data about your customers, allowing you to further tailor your product or service to their needs.
Once again, these benefits are reinforced in the data. 15% of mobile wallet users surveyed say they’re encouraged to use it because merchants near them accept it. 12% like the fact that they receive rewards and benefits, while another 12% value the option for electronic receipts.
Is Cash Still King?
When asked how they preferred to pay for certain items when buying in a shop or store, 44% of those surveyed across Belgium, Germany and the Netherlands answered “cash”.
However, when we look at the countries in isolation, the difference between them is stark:
● In Germany, 63% preferred cash to other methods.
● This number falls to 51% in the Netherlands.
● Meanwhile, only 19% of those surveyed in Belgium preferred cash.
This certainly points to a cultural difference between the three countries — and in Germany in particular, where cash still reigns supreme.
And What About Contactless?
Like cash, contactless remains a popular payment method, but its usage varies across the generations. 32% of Baby Boomers and older surveyed have a contactless card and use it for contactless payments, compared with:
● 34% of Gen X (born 1961-81);
● 39% of Millennials (born 1982-96);
● 45% of Gen Z (born after 1996).
While 21% of those surveyed across Belgium, Germany and the Netherlands have a mobile wallet and use it, the numbers become more telling when we drill down by generation.
38% of Millennials and 32% of Gen Z have a mobile wallet and use it, while 24% of Millennials and 26% of Gen Z don’t currently have one, but would be interested in getting one in the future.
These are the same groups comfortable with contactless, and the same groups on board with the idea of no longer needing to carry cards or cash. They already expect a seamless shopping experience — it’s now up to you as a store owner to meet those expectations.
We can help. Contact CCV to learn more about our in-store payment terminals, and to start accepting mobile wallet payments today.