With digital technology, anything seems possible. It was inevitable that once wireless technology became dominant, transactions could happen with a wave — not one of a magic wand, but of a mobile wallet.
The mobile wallet is popular among early adopters. After recently coping with conversions to “chip” technology with credit cards, will merchants embrace this new technology? Retailers got on the bandwagon after many consumers had received their new chip cards months before. Media pushes for the mobile wallet technology make it seem easy and quick to use.
However, while consumers with chip cards issued by their credit card companies waited for mass retail adoption, there was a sense of concern about the security of retail systems. Hacking has grown to epic proportions, so consumer concerns about security raise a valid point.
Pros and Cons of Mobile Wallets
Currently, finding a business that embraces mobile wallet technology is a hit-or-miss proposition.
A survey indicated that, especially among the young and the affluent, people want the opportunity to keep their coupons, offers, and loyalty programs in a mobile wallet. In July of 2016, only about 23 percent of 1,000 people surveyed had used mobile wallets to pay with credit cards. 55 percent of those surveyed would like to have that capability.
What are the pros and cons of mobile wallets for both consumers and vendors?
By using a mobile wallet, consumers have everything in one place: offers, coupons, tickets, credit information, IDs. They can travel lighter. Since people generally take their phones everywhere with them, their information would be accessible for any kind of account the consumer wishes to include in the “wallet.”
Loyalty programs, coupons, and boarding passes are the highest three uses by consumers in the survey mentioned above. According to Sprint, receptivity to stay enrolled in programs is high with only about one percent uninstalled for a special promotion they offered.
Next, businesses can attract the technology-oriented consumers who tend to spend. Since consumers who love technology would want to enjoy this time and money-saving approach, it’s a win-win situation.
Instead of sending out special mailed coupon circulars as some retailers do, requiring printing and postage, they could focus on the big spenders who prefer to have the sales comes to them via their smartphones. Millennials who love technology and keeping things simple are eager to embrace mobile wallets.
Additionally, with mobile wallets, businesses can gather more information so that they can market more thoroughly and target their clients better with sales, coupons, and specials. The merchants can target consumers with right on time offers when the consumer is in the neighborhood.
And finally, eventually, credit card fees for businesses will decrease due to lower fraud rates anticipated with the use of mobile wallets.
Adoption of new technology, especially if it calls for costly equipment, is not attractive to small businesses. For instance, chip readers, which were supposed to make transactions safer, have initially resulted in annoyance as consumers find it takes longer to finish their transactions.
Lack of locations that provide the mobile wallet technology will slow down the adoption of its use. Why would a consumer using a technology if there is no place to use it? Depending on how long it takes merchants to adopt the use of mobile wallet technology, they could lose business if consumers go elsewhere before they do decide to embrace mobile wallet technology.
If everything is on a smartphone and the digital device is misplaced or stolen, how can — how long will it take for — the consumer to recover their information? Is their personal and credit information vulnerable?
As with many new technologies, adoption lags in consumer interest levels. Smart businesses will attempt to get in quickly so they can be noticed and remembered as the place to shop. Consumers will remember which firms were quick to adopt the new technology and make life easier for them. Talk about a win-win situation!