We are living in the digital era, where virtual reality is replacing the physical commodities. Digital wallets are sort of virtual containers, in which you can carry multiple virtual goods. Digital wallet can be your smartphone, tablet, television, computer etc.
E-Wallets make it easier for customers to purchase things without any hustle of using their cards (debit/credit) and cash from their physical wallet. It is convenient to make payment via mobile wallet instead of carrying cash or credit/debit cards. Apart from making payments, mobile wallets can retain and secure personal information of people, such as identity cards, travel IDs, driving license and other credentials.
Mobile wallets have strong potential to get more popular in next couple of years. However, despite having numerous advantages, there are still plenty of non-users. This evidence highlights the opportunities for marketers, as it is a way for businesses to form new kinds of loyalty programs, promotional opportunities, and moreover, it helps businesses to track the customer’s preferences. According to the statistics by Ystats Global Alternative Payment Method (2016), “E-wallet is expected to remain the payment method with the highest share of the global e-commerce market through 2020”. As an alternative form of payment, in 2015 e-wallets, such as PayPal accounted nearly 31% of e-commerce sales worldwide.
The use of mobile wallet is most common in Western Europe; however, this trend is equally prevalent in the emerging economies, for instance, China where 56% of online purchases were made through mobile wallet in 2016. There are signs of increased customer interest in payments via the mobile wallet.
In presence of all the potential benefits for marketers and customers, there sure are some challenges and risks associated with digital wallets. Several studies have revealed that security remains the prime obstruction to the wide-scale adoption of mobile wallets. There are approximately 70% people who believe that payments via mobile wallet increase the risk of fraud and identity theft.
Other challenges include; lack of awareness about the proper use of mobile wallet among users, lack of PoS (point of sale terminals), and need for a shift in consumer behavior. Many of the businesses do not completely rely on mobile wallet payment system, and at the same time, customers also are not ready to trust the app on the phone with their payment data. Nevertheless, these challenges can be overcome by enhancing the security of mobile wallet and making it more reliable by introducing biometric security checks.