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Consumer Interest in the Digital Wallet Exceeds 50%; with New Payments Solutions Being Implemented, High Adoption Should Be Anticipated according to AlixPartners Study

NEW YORK, Sept. 8, 2014 (GLOBE NEWSWIRE) -- As mobile capabilities continue to improve, consumers are using their smart devices for an increasing number of activities that used to require a computer, television, or even cash. The conducting of mobile money-related transactions has already reached 39% among smartphone/tablet owners according to the AlixPartners Mobile Financial Services Tracking Study. Importantly, however, only 12% of smartphone/tablet owners surveyed reported making a purchase in a store, restaurant, or other point-of-sale location using their mobile device in the month prior to the survey. Meanwhile, it shows that those who do use their mobile device to make in-store purchases seem to use a variety of different technologies and payment methods as no clear standard method has yet emerged. With consumer awareness and interest in mobile payments high, new payments solutions from the digital brands, hardware developers, or even banks may be the necessary catalyst for broad adoption.

Today's retail point-of-sale mobile purchasers use a variety of different technology approaches. The set of most common solutions employ existing hardware and systems, and involve varying degrees of transactional "friction." The most "frictionless" solutions are not very common in the United States. As shown in the study, among consumers who made mobile purchases at point-of-sale locations in the month prior to the survey, the most common approaches were as follows:

  • 24% scan a barcode or QR code through a mobile-payment offering such as LevelUp or the Starbucks app
  • 18% use other mobile checkout services such as Amazon 1-Click
  • 16% manually enter payment-card and billing information at checkout
  • 15% check into a store or restaurant and pay by stating their name at checkout through an app like Square Wallet or PayPal Here
  • 13% use texting or SMS through apps like PayPal where users text a keyword or code to pay
  • 11% use a contactless method such as Near Field Communication (NFC) where users wave their phones near the checkout register for payment using the Google Wallet app

"The plethora of different approaches to conducting point-of-sale mobile purchases reflects the strong consumer demand for the convenience and value of mobile purchases – and consumers' resulting willingness to use 'work-around solutions' to capture that value," says Bob Hedges, managing director in AlixPartners Financial Services Practice. "Consumers will keep pressing, and better and more frictionless point-of-sale solutions will only accelerate adoption."

Consumer awareness of digital wallets solutions has now reached 52% among smartphone/tablet owners according to the study, and is fairly consistent across age groups. A digital wallet is defined as a tool that stores all of your payment card numbers (e.g. credit cards, debit cards), loyalty and gift card information, reward programs information, coupons, and discounts; all of the stored information can be easily used to make payments on your mobile device. Of the digital wallets providers, PayPal and Google appear to have the strongest brand awareness at 87% and 85% awareness among those surveyed and aware of digital wallets, respectively. Meanwhile, the study shows that other providers have also gained traction, MasterCard (53%), Visa (48%), Square (47%), and American Express (43%).

Younger smartphone/tablet owners appear to be the most strongly interested in actually using a digital wallet, with 68% of 18 to 25 year olds and 66% of those between 26 and 34 surveyed saying they are interested in using one. For those who reported that they are not interested, the main reason stated was concern over security (64%). Security concerns were fairly consistent across age groups.

Shopping and commerce are inherently important features of digital wallets. "Strong concerns" over using a mobile device for shopping/commerce appear only modest and mostly held by older consumers according to the study. Only 19% of 18 to 25 year olds and 25% of 26 to 34 year olds responded that they were "extremely or very concerned" about conducting shopping activities on their mobile phone. "Younger consumers are very ready for the digital wallet concept and the convenience and value that it will unlock," says Teresa Epperson, managing director in AlixPartners Financial Services Practice. "For younger consumers, the digital wallet concept is a fully natural extension of how they already broadly manage their lives with their digital devices."

Even among smart mobile device owners surveyed who have concerns over using their mobile devices for shopping/commerce, there appears to be some positive sense that certain providers were well equipped to address those concerns. Among those consumers who reported that they were at least somewhat concerned about using their phone for mobile shopping/commerce, a set of companies were viewed by some concerned consumers as being capable of addressing these concerns:

  • 39% PayPal
  • 38% a bank
  • 34% a credit card company
  • 29% Amazon
  • 21% a mobile service provider
  • 18% Apple
  • 18 Google
  • 15% a large retailer
  • 13% Facebook

"Consumers continue to be scrutinizing of which firms and digital brands are worthy of their trust around data security and the management of personal information," says Hedges. "The upcoming wave of new point-of-sale payment solutions will be an important test of who can strengthen their trusted provider positioning to support more frictionless mobile payments adoption."

With consumer awareness and interest now high, in order for mobile commerce and payments to become a part of consumer's everyday lives, the real and perceived security concerns must be addressed. Adoption will require more than just launching new and exciting products; consumers will need to feel that their transactions are protected and personal information both secure and appropriately managed.

About the Study

The AlixPartners Mobile Financial Services Tracking Study comes from a consumer facing survey conducted by AlixPartners at the end of the second quarter of 2014, and is the latest edition in AlixPartners' semi-annual Franchise Health Survey. The overall survey has been conducted in the second and fourth quarters annually since 2008, and the most recent one includes an online panel of nationally representative samples of 5,006 U.S. consumers of at least 18 years of age.

About AlixPartners

AlixPartners is a leading global business-advisory firm of results-oriented professionals who specialize in creating value and restoring performance at every stage of the business lifecycle. We thrive on our ability to make a difference in high-impact situations and deliver sustainable, bottom-line results. The firm's expertise covers a wide range of businesses and industries whether they are healthy, challenged or distressed. Since 1981, we have taken a unique, small-team, action-oriented approach to helping corporate boards and management, law firms, investment banks and investors respond to critical business issues. For more information, visit www.alixpartners.com.

CONTACT: Tim Yost tyost@alixpartners.com +1 (248) 204-8689

Source: AlixPartners