NEW YORK (MainStreet)—The eventual success of digital wallets will depend heavily upon two factors: the ability of digital wallet providers to market their offerings to both wary and unaware consumers, and the cooperation of the various players in developing a standardized and universal operating platform.
In other words, the various mobile wallet capabilities need to find a way to get along.
Consumer incomprehension of the functionality and benefits offered by digital wallets remains a challenge for marketers.
Jordan McKee, associate analyst with the Yankee Group, cited the disparate digital wallet initiatives as an inhibiting factor to the sector’s growth.
“There’s not much cooperation,” he said. “Everyone’s in it for themselves.”
McKee compared the digital wallet industry’s current landscape to that of the American automobile industry in the 1920s, saying many of today’s digital wallet providers are “struggling to gain traction.” He suggested that “some consolidation needs to take place to spark the adoption and use of digital wallets.”
“They really haven’t figured out what they want to be when they grow up,” McKee concluded. “They need to take time and carve out value propositions for the consumer and the merchant to adopt.”
In February, comScore.com published its Digital Wallet Roadmap 2013, which contained the results of a pair of surveys designed to measure consumer awareness and understanding of digital wallets. Andrea Jacobs, comScore’s payment practice leader, noted that 47% of participants expressed security concerns. Many had no idea that a digital wallet can be locked and that customer information is not directly shared with the retailer.
“We learned that people have significant concerns in the area of security,” Jacobs said. “Enhanced security is a concern if a card is lost or stolen.”
ComScore’s Roadmap also found significant numbers of consumers who demonstrated a general lack of understanding of the functionality, compatibility, privacy and locking features digital wallets offer, largely because digital wallet developers have not adequately explained and marketed their products. Jacobs said that these gaps in understanding represent opportunities to gain potential customers.