Only One in 10 Online Consumers Use a Digital Wallet: Forrester

While nearly two thirds, or 61%, of U.S. online consumers have heard of a digital wallet, only 11% actually use one, an indicator that wallet providers still face challenges reaching consumers, according to Forrester Research.

While consumers have been slow to adopt mobile payments, the growth of value-added services and the expansion of "omnichannel" wallets that bridge mobile and in-store shopping experiences are among the options that merchants can leverage to boost consumers' use of mobile wallets, according to new research by Forrester.

Although mobile wallets that work remotely from merchant locations are the most prevalent wallet type today, omnichannel and proximity-only wallets will have the fastest growth going forward, Forrester says, adding omnichannel wallets can be used for electronic commerce, mobile commerce, in-store shopping and proximity payments.

"Just as omnichannel commerce is an evolution, the omnichannel mobile wallet is as well," says Denee Carrington, an analyst at Forrester, and one of the authors of the report, which was released Dec. 2. "Omnichannel will be important in the future as consumers use connected devices and mediums of all types, such as gaming consoles, smart TVs, smart posters, etc."

The valued-added services that wallet providers attach to wallets is key to convincing consumers and merchants that mobile proximity payments are an improvement over existing plastic card methods that are already working well, Forrester says.

While nearly all wallets include offers and coupons, wallets can also deliver value to merchants that can deploy lower cost marketing to increase spending of use of the wallet by consumers, Carrington says. Consumers are most interested in having loyalty programs on their mobile wallet — 67% of consumers listed such a preference, according to Forrester, which also reported 66% are interested in coupons. But other value-adds are also very popular, including price comparisons (65%), location-based offers (62%), pre-ordering (60%) and digital identity storage (57%).

Remote-only wallets, such as Amazon.com, Macy’s, Target, and V.me, include mobile ordering, store finders, and in the case of Visa’s V.me, streamlined checkout. Proximity-only wallets, such as Dunkin Donuts, Starbucks, Isis and Square offer mobile ordering, mobile gifting in the case of the retailer wallets, check-in to pay in the case of Square, and merchant directories. The merchant-led wallets have customized value-added services, but with narrow consumer appeal, Forrester says. That means merchant wallets will have early adopters that are loyal and engaged consumers — which will also enable merchants to use a slower ramp up to alter the wallets based on learning from the merchant’s best customers.

Omnichannel wallets, or wallets from PayPal, MasterCard’s MasterPass, Dwolla, Google and Paydiant that combine remote and proximity pay, offer value adds such as check-in to pay by PayPal, and mobile ordering with in-store pickup, Forrester says.

There are a number of examples of how these companies provide payment services across mobile apps and other channels. PayPal and MasterCard have both made appealing to consumers in different channels a top priority to boost adoption of mobile payments

MasterCard is also working on technology that allows consumers to use barcodes to scan an item at a store, then have that item shipped to the consumer’s home. And PayPal, shopkick and Apple are developing uses for Bluetooth Low Energy, wireless technology that can improve in-store marketing for mobile payments applications.

"An omnichannel wallet will be an important enabler and a point of differentiation as companies compete to serve the always addressable consumer who may want to engage from anywhere, though any device, at any time," Carrington says.