There hasn’t been any statement by the makers of physical wallets on the digital shift, but mobile wallet proponents see a time fast approaching where those faux leather filing cabinets full of payment and identity cards that we tote around everywhere will no longer be necessary.
Besides the benefit of pants fitting better without the bulging wallet adding to waistlines, freedom from physical delivered by mobile wallets literally pays off in better biller interactions, smoother payments and the ability to navigate the world by smartphone.
In a conversation with PYMNTS, ACI Worldwide Principal Solution Consultant Tom Donovan laid out a series of use cases for how mobile wallets are powering new and better experiences.
Clarifying that the mobile wallets we’re most concerned with as “the Apple Wallet app on iOS or the Google Wallet app on Android, both of which are natively pre-installed right out of the box on every smartphone today,” Donovan said adoption and growth are heating up.
“The pandemic really helped with that growth because it drove so many people to thinking about contactless ways of living,” he said. “Putting their card in their wallet so they don’t have to touch the payment terminal, or maybe storing a loyalty card there so that they don’t have to hand that over to the cashier.”
That slow-and-steady adoption is seen in PYMNTS data with the August report “Mobile Wallet Adoption: Apple Pay @8 Still the Big Fish in a Small Mobile Wallets Pond” finding that “adoption jumped significantly in the second quarter, and Generation Z consumers made nearly one in 10 transactions using mobile wallets, followed by about 8% for millennials and bridge millennials.”
Donovan said he sees the slow pace of adoption now as retail and eCommerce infrastructure catch up with mobile wallet tech.
Noting that when Apple Pay launched only about 3% of U.S. merchants could accept that payment, nowadays “that number is right around 90% and growing. We’re reaching that nearly 100% adoption rate that you would see in many international markets where mobile contactless payments are significantly more often used than they are here in the U.S.”
From Bill Pay to Gift Cards to ID
Different billers and merchants are generally getting more creative and intuitive with their mobile wallet integrations and functions, so adoption could start jumping up and to the right.
Donovan rattled off several ways this is happening, using some examples from his own life. Talking about going to see the movie, “Top Gun: Maverick” a few months back, he said, “I went on Fandango and bought my tickets, so I didn’t have to wait in line once I got to the movie theater. Right on the checkout page, they have an ‘Add to Apple Wallet’ button, so I was able to save that movie ticket directly into my mobile wallet to save that time and streamline the process.”
From there, he swung over to a tasty use case, describing how the blight of unused gift cards can be turned around by mobile wallets, unlocking potentially billions of dollars in value.
For example, he said, “you can place a Chick-fil-A gift card into your mobile wallet so that when you go to Chick-fil-A, you don’t sit back and say ‘I left my gift card at home,’ which I’m guilty of doing way too many times.”
Other use cases go further still, enabling billers to put bills right into consumers’ mobile wallets. And going deeper into what mobile wallets can do, Donovan noted that they are being recognized by more states as able to carry legal identification, menacing the legacy laminated license.
Pointing to the section inside Apple and Google wallets called “passes,” Donovan told PYMNTS “loyalty cards, rewards cards, coupons, last year, I believe, Arizona was the first state to actually launch an MDL — a mobile driver’s license — that lives inside Apple wallet. Maryland, I believe, has gone live as well. Those are even able to be used at TSA checkpoints. It was a pretty aggressive move for Apple to go right for the TSA out of the gate.”
It was also shrewd on the adoption front as once a consumer tries the mobile credential, it builds instant delight and confidence, which drives more usage, making the old leather version we carry around seem more outmoded with each tap and pass.
See also: Merchants Bring Context to One-Click Commerce Via Smartphones
A Wallet for the Connected Economy
Mobile wallets are tailor-made for the connected economy as they do much more than pay for stuff. Increasingly, they prompt us to buy things we weren’t thinking about, and merchants can take that mobile wallet and smartphone features like geolocation and alerts in new directions.
Donovan shared that while in downtown Philadelphia, Pennsylvania recently, “I’m within 100 meters of the Nordstrom location. I see a notification pop up on my phone because it knows I’m within that radius and it says, ‘Hey, you have a coupon that’s valid today.’ That helps me go into Nordstrom. They would get an additional purchase, and I would be happy that I had that experience.”
Another real-life experience is the fact that he was recently engaged, and a friend shared a mobile wallet pass from David’s Bridal.
He said soon after, “I started seeing these notifications pop up from David’s Bridal on my phone, and I was thinking, ‘Wow, this is actually relevant and timely for me.’ It’s very useful and it certainly can help drive more engagement and make it very easy for that consumer to make sure they always get their rewards, earn their points, or be able to cash in those rewards or credits on their purchases.”
Having obviated the need for a physical wallet, keys are also on the list of what mobile wallets can rid us of through “access” features built into iOS and Android wallets, he said.
Both wallet apps now support the “access” feature so that “instead of having a key fob at their office, for example, [users can] tap their phone at the front door of their office building to get inside,” he said. “Or if they have an Apple Watch on, they could tap their watch at that reader to then be able to access that building.”
That access can be sliced and diced, giving different permissions to network admins than to a gig worker, for example. He added that the access feature is becoming popular on college campuses, with a few dozen around the country using them to give students and staff access to buildings.
What’s nice during this adoption phase of mobile wallets is that once a person tries it, they tend to like it, even Donovan’s mom, who he said isn’t an early adopter of digital tech.
“Consumers are seeing lots of other people out in the field use this,” he said. “My mother isn’t terribly technically savvy. She saw people doing this and asked me how they were doing it, so I showed her. Now she uses it pretty often.”
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