Digital Wallet Awareness High, Despite Low Consumer Adoption

Typical products purchased with digital wallets include coffee or drinks, retail items, games and books, as well as groceries.

digital wallets and digital payments

Usage of digital wallets remains at less than one-third, even though a surprisingly high number of U.S. consumers—80 percent—recognize the technology as an alternative to cash-based transactions, according to a survey of more than 2,000 smartphone, tablet and desktop users from local search and digital marketing research firm Thrive Analytics.

The top digital wallets used are PayPal (79 percent), Google Wallet (40 percent) and Apple Passbook (17 percent), with Google Wallet leading the large transaction pack with purchases of $30 or more (35 percent).

Further, 70 percent of digital wallet users take advantage of one or more digital wallets at least monthly, and daily digital wallet users tend to use more types of digital wallets—three, than infrequent users, who use one.

Security concerns remain the main barrier to adoption, followed by lack of usability versus credit cards or cash (37 percent) and not being top of mind as a form of payment at the time of purchase (32 percent).

"Until consumers become more comfortable with using digital wallets, particularly from a security perspective, transactions will likely continue to be smaller amounts--likely less than $20 per transaction," Jason Peaslee, managing partner at Thrive, told eWEEK. "Payments at brick-and-mortar locations are far less secure than digital wallet payments, as there are several more layers of security built into the technology. Also, with vendors like Visa and now Amazon, these providers have a vested interest in ensuring security."

He noted a recent report by the Federal Reserve found that of 250 million digital wallet transactions last year, more than two-thirds were for transactions under $10, with 42 percent of them falling under $5.

Typical products purchased with digital wallets include coffee or drinks, retail items, games and books, as well as groceries, with the majority of digital wallet transactions conducted on mobile devices (60 percent) and 75 percent of transactions under $10 done weekly with a mobile phone.

Many consumers are carrying less cash today, especially on-the-go females, and 50 percent of all consumers carry less than $20 on a regular basis, the study found.

Of the survey respondents who carry no cash at all, three-quarters are under the age of 40, and nearly 60 percent of all digital wallet users are male despite carrying more cash than females.

Young females (between the ages of 18-29) tend to use merchant digital wallet apps such as Target, Macy’s and Home Depot more often than males to look for discounts or coupons (72 percent) and price shop (56 percent).

When males use merchant apps, they tend to browse and engage in service-related activities like paying bills and looking up retailers’ product and contact information, according to survey results.

"Speed is absolutely a factor to adoption," Peaslee said. "But typically for most digital wallet vendors like Google Wallet, PayPal and even the merchant apps, once a consumer takes the five minutes to set it up, it's very convenient and much faster than digging around in your pocket or purse for change."