PayPal launched the world’s first digital payment wallet in 1998. Nearly 30 years later, digital payment wallets are still novel to more than half of U.S. consumers.
JD Power’s 2024 “Digital Wallet Satisfaction Survey” published In March 2024, we found that only 48% of U.S. shoppers use digital wallets online and offline.
Separately, JD Power Found Only 57% of small and medium-sized merchants in the U.S. accept that payment method.
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There are many reasons why implementation may be delayed.
J.D. Power researchers noted that the U.S. payments market, which is “fragmented and far from mature,” does not yet offer a universal wallet that works across web, mobile, and in-store channels.
“Digital wallets have plateaued at 50% of U.S. consumers, unchanged from last year,” Sean Gelles, senior director of payments intelligence at JD Power, told Practical E-Commerce.
in POS surveyJD Power surveyed approximately 48,000 non-digital wallet users in the United States between September and November 2023. Their biggest concerns were:
- security (35%);
- Difficult to use (17%)
- Habits (16%)
A year later, nearly 22,000 non-digital wallet users surveyed had much the same problem.
“You would expect speed and convenience to motivate consumers to try digital wallets,” Gelles says. “But consumer attitudes haven’t evolved. Non-users and users don’t fully understand the benefits.”
safety
Gereth was surprised. safety concernsstates, “Although digital wallets encrypt and tokenize account data and don’t even share it with merchants, one-third of survey respondents believe they are not secure.”
“We need to educate the U.S. market,” Gelles said. “Some consumers believe that digital wallets send information to cyberspace. Wallet provisioning is an advanced process. I will not provide the information to anyone.”
difficult to use
Gelles observed that consumers who have been using a digital wallet for less than a year have lower satisfaction scores than those who have been using it for a longer period of time.
Gelles added that speed and convenience are critical in the modern economy, and said most small business users believe in digital wallets. eliminate friction Increase conversions while reducing chargebacks and fraud.
habit
Gelles said wallet providers can do more to improve customer onboarding and support. As a merchant, you can help your customers make informed decisions during the checkout flow. “The key is to know your customers and provide them with the best checkout experience possible.”
While 16% of respondents said habit was a barrier, Gelles observed consistent factors guiding customers. towards digital wallet. In the 2023 POS survey, wallet users cite the following benefits:
- Speed (45%)
- Easy (44%)
- Seller acceptance (24%)
- Security (24%)
worldwide acceptance
Despite slow acceptance in the US, wallets accounted for 50%. global In 2023, e-commerce only sales; According to Go to Worldpay’s 2024 “Global Payments Report.”
Asia Pacific continues to dominate digital wallet adoption, according to a Worldpay report. Consumers in APAC will spend over $2 trillion on e-commerce in 2023, accounting for 70% of the region’s e-commerce transactions and over 64% of the world’s online digital wallet spending. Worldpay researchers predict other regions will follow APAC’s example.
Tracy Lai agrees. She is a founding partner of leister groupa New York-based consulting firm and chairman of the Fintech and Finance Alliance, a nonprofit membership organization.
Lai said digital wallets are a necessity in daily life in Asia. “Asians are more receptive to digital wallets because they… Introduction of credit card I was riding my bike and immediately using my smartphone to make cashless payments,” she said, noting that most people in the region are willing to sacrifice some privacy for convenience. did.
Lai added that digital wallets are now the default payment method in the Asia-Pacific region for both online and offline transactions. She gave a recent example at a coffee shop in Shanghai, where she was surprised to see a standalone digital wallet scanner for WeChat Pay and Alipay.
“When we asked why they didn’t have a traditional POS device, they said scanners were more convenient and didn’t charge transaction fees,” Lai said.
