Consumers want, yet fear, mobile wallets

The payments space is more complex today than it ever has been before. Retailers may have once had just a few transaction options they needed to account for, and those methods, such as cash and checks, were often simpler to keep safe. As electronic methods, including credit, debit and ACH cards, came into play, consumers and merchants alike needed to worry about more involved schemes, including hacking, which could lead to compromise.

But what about today? Now, the aforementioned digital purchase tools are no longer on the cutting edge thanks to advancements in mobile payments, which are growing in popularity. However, while deploying mobile technologies is becoming a business essential, it is critical for companies to clue into consumers' concerns. While users want to leverage their smartphones and tablets for easier transactions, security is at the forefront of their minds.

Alternatives preferred
Mobile Commerce Daily noted that in a recent survey by PayPal, 29 percent of Americans said that given the choice between leaving the house with either their smartphone or their wallet, they'd choose the device. Additionally, 68 percent admitted that they'd encountered a situation where they couldn't pay for something because they didn't have cash, with 30 percent of American respondents saying these problems cropped up frequently.

Anuj Nayar, senior director of communications at PayPal, believes that the survey suggests that now may be a prime opportunity for digital wallets to truly take hold. He told the source that in the study, individuals in all five global markets examined displayed a desire to reduce their reliance on physical wallets.

But while mobile payments have many benefits, Mobile Commerce Daily stressed that the real purpose these technologies serve is addressing the pain points many shoppers encounter, including being unable to pay for an item due to a business not accepting their other electronic methods. Additionally, digital payment solutions can offer customers small but significant conveniences, such as allowing consumers to place advance orders, as Jamba Juice has already done with PayPal's help.

Worries abound
But despite the vast potential of mobile payments and shoppers' dreams of leaving their wallets at home, there are still concerns about these transaction methods that must be resolved if merchants and developers want these technologies to catch on. In a survey of 1,500 smartphone owners by research firm Chadwick Martin Bailey, users explained what was keeping them from adopting a digital wallet, and security figured significantly in this choice.

In fact, 73 percent of respondents said that they are worried about security, while another 34 percent were concerned because they don't want retailers to have their payment information. When asked to specify where their misgivings stemmed from, 70 percent said identity theft was their primary concern, 60 percent cited theft or loss of personal information and 57 percent were afraid their financial data would be intercepted during a transaction. Any of these situations could have a negative affect on their consumer credit reports, making it more difficult to make major purchases in the future.

Jim Garrity, SVP of Chadwick Martin Bailey's Financial Services practice, said that these security concerns indicate that digital wallets may catch on more easily if financial providers, not retailers or specialized payment companies, spearhead the movement toward new money management technologies by developing these offerings. While Garrity noted that banks could play a major role in the adoption of mobile wallets, alternative providers also have the opportunity to figure prominently, especially when it comes to consumers who don't use traditional financial services. This way, even individuals who do not want to use a standard bank will have a way to safely take advantage of these trends and the conveniences they offer.