What’s ahead for the digital wallet?

18 Apr 2018

By Rob Price, Chief Operating Officer, Worldline (Atos e-payment Services), UK and Ireland

When I drive to my local railway station, the station car park recognises my arrival through number plate recognition. I drive straight in, with digital signage telling me how many spaces are free. I walk through the station and get straight on the train. When I return, the car park transaction is quick and easy – contactless card or mobile wallet payment at the kiosk, and the exit barrier lifts as it recognises my number plate.

I like this digitalised experience because it makes things quicker and easier for me.

This is a common theme of the global digital inclusion survey we’ve just completed, which revealed how people feel about digital technologies – including how they pay for things. It’s clear that where the consumer is motivated or incentivised through personal benefit, then there is better adoption. Other than cost savings, the two benefits that stand out for consumers are time saved and improvements to their health.

Card versus mobile

Undoubtedly, the adoption of contactless cards has been a success. In our survey, after accessing the internet, managing personal finances online (60% love it) was the second-most comfortable activity – but it was quickly followed by paperless travel tickets (59%) and contactless card payment (43%). When it comes to contactless payments, Europeans are currently more comfortable and accepting of the technology than their counterparts in the Americas and Asia.

So it’s interesting to note that when we look at mobile payments using a digital wallet on a phone or watch – replacing physical cards altogether – comfort is higher in Asia. In fact, users in Asia are more comfortable with the other (perhaps more) future payment types we asked about such as biometrics and cryptocurrencies. Common to all these payment types is the dematerialisation of the card(s) into a digital wallet, irrespective of whether this wallet is associated with the individual user, the merchant (hence multiple wallets) or a third party (such as Android Pay and Apple Pay).

Trust and security

To date, we have seen consumers trying out digital wallets without, necessarily, a wholesale switch to the wallet as the default. This is surprising given that mobile payments involve extra security layers, such as the smartphone PIN or a biometric, usually, thumbprint. This, perhaps, isn’t registering with users as a real benefit.

This all points to comfort with existing payment methods, despite the extra security that mobile devices provide. Where contactless cards are established, they are trusted and easy (saving time), so there is less incentive to transfer to a digital wallet. Where contactless is less established, there is the potential to accelerate adoption of completely digital payment methods. One good example of this is India, where following the Demonetisation Policy in 2016, which removed a large percentage of cash from circulation, there were mass roll-outs of digital terminals and electronic payments.

Remember, though, the other benefit that stood out from the survey: health improvement. As I travelled on the London tube the other day with a colleague, I noted that whilst my contactless card entry to the gate was easy and normal for me, my younger colleague simply strolled up to the gate, wafted his arm across the reader and moved through: he had a digital wallet on his watch. Whilst the time taken was similar, his was potentially the safer transaction as I’d had to take out my wallet to find my card.

Cashless society

In this way, digitising payments should help to increase users’ physical safety as well as improving transaction speeds. Yet this will only become a reality when there is the incentive, not only for the consumer – time and health, underscored by trust – but also the merchant and the bank. This is where the Second Payment Services Directive (PSD2) will help, improving security and driving innovation so that transactions can be executed more widely. Together with the advent of Faster Payments (ISO 20022) to standardise and accelerate processes for remote banking payments, this will help to increase trust levels among consumers and merchants.

There is another finding of the survey that is helpful here. Across all payment related responses, we see a clear difference in degree of trust according to age – in essence, the younger you are, the more likely you are to use digital payment methods. Whilst logical, this evidence does suggest that targeting certain geographies that are more open to digital payment methods and goods likely to be bought by younger consumers (under 30) will significantly accelerate adoption rates. There was, incidentally, almost no difference between male and female consumers in their trust of payment technologies.

We forecast that when these changes and improvements start to happen, use of the digital wallet will significantly grow in all geographies. At that point, we will be much closer to the ultimate goal of a safer, more secure cashless society.

Worldline digital wallet

More and more digitally connected consumers want to order and pay for goods anytime and anywhere, easily and securely, with a smartphone, tablet or PC that’s always at hand. For merchants and businesses, too, the benefits of secure digital wallets are significant, including:

  • Higher transaction volumes
  • New businesses
  • Cost effective delivery
  • Better customer intelligence
  • Higher customer loyalty
  • Faster and more accurate reporting
  • Excellent fraud security
  • New partnership opportunities.

Digital wallets are at the heart of Worldline’s strategy to implement seamless customer experience, while supporting the transactional business of its clients with omni-channel payment services. Worldline Wallet is a single cloud-based server solution that offers in-store and remote payment.

This article is part of the Atos Digital Vision for Financial Services. This new opinion paper features contributions from leading subject matter experts and notes how changes to consumer habits, combined with an evolving regulatory framework and the rapid propagation of new technologies, is leading to a profound transformation in traditional banking and insurance models.

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