|DIGITAL WALLETS: Consumers still hazy on the concept|
Only 51% of U.S. consumers were aware of digital wallets other than PayPal, according to a survey by comScore, Inc.
"Digital wallets represent an innovative technology that has not yet reached critical mass among consumers due to a variety of factors, including low awareness and a muddied understanding of their benefits," says Andrea Jacobs, comScore Payments Practice Leader.
The study is based on a unique research design combining comScore's opt-in panel of 1 million U.S. consumers and two separate surveys of more than 2,000 U.S. internet users conducted in November 2012.
To better account for the intent of consumers to use digital wallets, the study first removed the awareness gap that existed between users and prospects by introducing respondents to various digital wallet offerings first-hand.
The current digital wallet landscape remains fragmented among providers because of low consumer adoption outside of PayPal, with only 12% of consumers claiming to have used a digital wallet other than PayPal. However, study results indicated that the digital wallet market opportunity could eventually reach 1 in 2 consumers as consumers become more aware of the offerings and educated on their benefits.
One clear barrier to use of digital wallets is that the concept is often difficult to convey and prone to misinterpretation. Even after being asked to review the websites of particular digital wallets, respondents across all wallet brands still scored an average of just 45% in terms of demonstrated level of understanding.
The study revealed that security remains a top consumer concern, but that a significant portion of consumers are not aware of security features inherent in digital wallet usage. While 93% of consumers would prefer to use a digital wallet that has to be unlocked before use, an average of just 57% of respondents across the brands studied realized-after having reviewed the digital wallet website-that this locking feature was available. Some digital wallet providers were more successful than others in communicating the availability of this feature, with 71% awareness among Lemon website visitors versus 42% among LevelUp website visitors. The ability to improve communications of features addressing consumer concerns, such as security, could remove an important hurdle to adoption.
"Low awareness, understanding of benefits and availability among retailers are among the key barriers to adoption of digital wallets. While these impediments may seem like a steep hill to climb, we have seen this story play out before in the financial services industry. There was a time when consumers were reluctant to use ATMs for similar reasons, and, today, look at how far we've come since the 1970s and 1980s," says Jacobs. "It would seem that the future is bright for digital wallets, but it will require deliberate execution of strategies such as sound marketing for this technology to realize its full potential. In order to win over consumers, wallet marketers, providers, developers, and retailers must work together to address each of the aforementioned barriers."
[This article was posted on February 12, 2013, on the website of ABA Banking Journal, www.ababj.com.]
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