Worldwide, there are over 2.3 billion smartphone users – potentially reaching over 2.8 billion by 2020. If mobile wallets are to leverage this penetration, they will need to offer more than just payments, and make consumers more aware of mobile wallet security, writes Patrick Brusnahan
Smartphone penetration – per 100 people – is generally high among European consumers, with values ranging between 56.09 in France and 91.33 in Norway, according to GlobalData’s Macroeconomic Indicators database.
A report from App Annie in 2017 showed that smartphone users now access over 30 apps on a monthly basis, with the average smartphone owner using at least nine apps per day.
However, despite the mobile app boom, mobile wallet apps have so far proved to be of little interest to European consumers. This is a result of a few outstanding myths about the solutions, but these myths – as myths, by definition, do – hold no basis in fact. Three of the main ones are as follows:
Myth 1: There is nowhere to use mobile wallets
Only 22% of consumers in European markets own a mobile wallet – and under half of those mobile wallet owners used their wallets at the point of sale in 2017, according to GlobalData’s 2017 Consumer Payments Insight Survey.
There are numerous reasons why consumers choose not to use mobile wallets to pay for items. These include security concerns, lack of knowledge about wallets and where to use them, and simple lack of interest or dislike.
Making mobile wallets more visible to consumers is as important as increasing the overall level of acceptance among retailers.
Although those mobile wallets provided by banks will generally present greater security for consumers, there are various payment and financial services companies that can deliver the same products to similar standards.
Moreover, mobile wallets should not necessarily specialise in one service – typically, POS payments – but look to offer a variety of extra services that could potentially attract more users.
When thinking of a mobile wallet, minds do not immediately jump to Apple Pay. However, that is exactly what Apple Pay, Google Pay and Samsung Pay are. These payment methods are already accepted at multiple locations across the globe at POS terminals.
Apple Pay alone is currently available in the US, UK, Canada, Australia, Brazil, the UAE, Russia, China, New Zealand, Singapore, Japan, Taiwan and Hong Kong, as well as various other European countries.
Myth 2: People are not interested in mobile wallets
Over half (54.2%) of European non-wallet users said they simply do not like the idea of using a phone to make payments, while 42.8% admitted they do not know where they could make a mobile payment.
A minority of European consumers would like a mobile wallet, with this option being cited by 15% of non-users. At the same time, more than a third of non-users (36%) would use a mobile wallet if it offered loyalty benefits. Therefore, wallet apps could potentially attract new users if they offered more than just the ability to make payments.
There are examples of mobile wallets taking a sizeable chunk of market share. Contrary to most European markets, Denmark has a significantly higher proportion of mobile wallet users (28%). This is because MobilePay, a local mobile payment solution, has been so well received by consumers and retailers.
Initially launched as a money-transfer app by Danske Bank, MobilePay has expanded to offer other services, including online and offline P2P payments to friends, family and even merchants.
MobilePay has successfully been integrated into Danish society and is supported by major payments schemes, as well as by more than 60 trusted bank brands, giving the service a high level of perceived security among consumers.
MobilePay initially grew out of a P2P-only payment solution, and then expanded to become fully integrated in everyday activities – transport, online and offline shopping, payments to friends and family. This shows that a successful mobile wallet should be more than another POS solution in order to compete with already well-established cards.
Myth 3: Mobile wallets are not secure
However, the biggest single reason European consumers do not – or have no desire – to use wallets is concern over what would happen to their payment details should their phone be lost or stolen (72.2%).
In the UK this percentage is even greater, with 73% of consumers worried about what would happen if their phone were lost; only 12.1% were not worried about this. As a result, 66.1% of UK customers do not like the idea of paying with their phone.
Clearly, there is a high level of insecurity when it comes to using and storing payment details on a smartphone, but this could potentially change if consumers became more aware of the security of wallet apps. This comes down to explaining tokenisation to consumers.
In tokenisation, no details are actually saved or transferred. To put it another way, instead of storing card details, mobile wallets such as Apple Pay generate virtual account numbers. A unique dynamic security code is generated for each transaction; no traceable credit card numbers are stored by the retailer, or by the wallet or smartphone. For additional security, transactions are authorised with Touch ID or a PIN.
So, in order to boost consumer engagement, mobile wallet providers should aim to increase consumer awareness of how convenient and secure mobile wallet apps can be. Dispelling these myths is crucial to the widescale adoption of the payment option.
While Apple Pay, Google Pay and Samsung Pay are not going anywhere, they could – and should – be going somewhere a lot faster.