Digital Wallets

5 min read


Digital Wallets… back to the future... soon, says Forrester

A digital wallet is an electronic device enabling an individual to make electronic transactions.

“A digital wallet payment is a non-cash payment that allows customers to make purchases from their smartphones or other devices by acting as an electronic wallet, digitizing payment information.”

The digital wallet is online shopping’s greatest asset in the war against abandoned shopping carts - at least 25% of online shoppers abandon their order due to frustration with filling out forms - digital wallet users have the option to transfer their information securely and accurately within this simplified approach, leading to a higher completion rate for transactions, better usability and ultimately better outcomes for the consumer and seller.

Despite these apparent benefits to the user, since at least October 2016 adoption and acceptance rates for digital wallets by consumers and merchants has been largely stable. However, the Forrester study underlying these findings highlights key signs that both business and consumers have maintained their interest and are preparing for a future where digital wallets will be a key enabler.

Coming attractions...

While digital wallet adoption rates remain stable consumer smartphone ownership increased from 79% in October to 83% in June and on the merchant side, more than half say they are likely to update their POS or eCommerce systems to offer the latest digital wallet solutions within the next year.

During this short intermission in digital wallet growth, the consumer market is becoming more technology aware, and in a not-too-distant future which will include features like order-ahead, self-service pay, instant coupons and reward redemption, features like after pay and contactless will be table stakes.

In this new payments ecosystem merchants will be expected to capitalise on increasing consumer awareness drive a better overall shopping experience by enabling consumers digital wallet usage and leading the way to digital wallet adoption.

Power Users take a starring role...

“Power Users lead the way, tend to be younger and more affluent and say that they love technology, own an above-average number of technology devices, and are the first among their peers to try applications, including banking technology online.

“They also report higher awareness of the possible features of digital wallets. Those features, such as order ahead, self-service pay, and instant coupons/ rewards, keep them using digital wallets over other forms of payment.”

Light Users play a supporting role. They follow their Power User friends. Light Users are comfortable with technology, but their adoption rates are lower than Power Users. Their lower overall technical knowledge especially in areas like stability or security which are key concerns for them especially when using banking technology online, they are more likely to stop using. However their main drivers for useage are the same as Power Users: order ahead and pay. Light Users remain interested, eager to learn and are willing to adopt digital wallets as long as they have access to the right information and usability.

Non-Users are largely uninformed and waiting to be bought-in.

“The top four reasons Non-Users gave for not using digital wallets were:

  1. concern about security
  2. haven’t taken time to figure it out
  3. don’t think their merchants accept digital wallets
  4. don’t think digital wallets are different enough from debit or credit cards to use them

They remain unconvinced and require careful education and nurturing through the Power User and Light User channels to win them over to the benefits of digital wallets.

Truth is better than fiction

When it comes to digital wallets, security has been a top concern in both Forrester studies with both users and merchants concerned about security. However, digital wallets use encryption and tokenisation to store and transfer sensitive payment data digitally, making payments as safe or safer than using a physical card with the inherent risk of theft or duplication.

There is a significant education opportunity here for digital wallet providers and merchants with all User types likely to embrace digital wallets sooner once they are told that merchants are ready to take digital wallet payments coupled with the security and usability benefits they present.


Merchants and providers are building the technology required to support the growth predictions for the digital wallet sector. First priority is to build payment integrations into applications and mobile web experience, removing the need for card detail entry into mobile devices.

“With Europay, MasterCard, and Visa (EMV) chip card reader mandates, US businesses of all sizes are implementing chip card reading capabilities at checkout, which usually include near field communication (NFC) technologies that power quicker and more robust digital wallet checkout capabilities.”

Merchants are looking to seize the operational efficiency and customer engagement opportunities of bringing customers over to the digital wallet side. They want to be more efficient at the checkout and meet their customers’ demands for a better shopping experience. The future is digital wallets. The future is mobile.

Until next time...

  • The digital and mobile payments infrastructure is expanding
  • NFC POS acceptance devices will be implemented by merchants to enable digital wallets at checkout and through online integrated mobile payments.
  • There is a key opportunity for outreach and education about digital wallet security, acceptance and features which will lead to sustained growth through enhanced customer experience.
  • It is in everyone’s interest to debunk the security myth. Digital wallets are as safe and as fast as physical cards.
  • Merchants need to spread the message and demonstrate to customers how the technology works and help drive “power use.”
  • “To really engage customers in the power and versatility of digital wallets, businesses should put offers and coupons in digital wallets.”
  • Consumers are actively looking for the improved shopping experience that digital wallets provide, and are especially interested in features like order ahead, self-service pay, and coupon/rewards redemption


This post relies on the following study and all quotes refer there unless noted otherwise.:

The Next Phase Of Digital Wallet Adoption - What It Takes To Convert Skeptics, Engage Early Adopters, And Prepare Merchants A Forrester Consulting Thought Leadership Study Commissioned By JPMorgan Chase September 2017