Mobile Wallet Adoption: Fantasy Or Reality?

By Anna Rose Welch, Editorial & Community Director, Advancing RNA

While current adoption rate is disappointing, Yankee Group expects “dramatic uptick” in 3 to 5 years

Two-thirds of consumers have shown interest in mobile wallets, a new Yankee Group report shows. However, regardless of this interest, adoption has remained slow for both merchants and consumers. According to the report, “U.S. Mobile Wallet Roundup: Gauging the Future Potential of Today’s Solutions,” only 16 percent of mobile users used a mobile wallet to make an in-store payment. There has been a lot written about the reasons adoption has been so slow. For some, the lack of NFC adoption on Apple’s part has been a big factor inhibiting the growth of mobile wallets. Similarly, merchants have been slow to invest in the hardware they would need at a register to accept mobile wallet payments because of the slow consumer adoption rates. However, this lack of adoption is certainly not because there aren’t options out there. In fact, Yankee Group expects this landscape will only continue to change in the next two years and face more innovation than ever before as third-party players continue entering the market.

In its recent report, Yankee says that, while widespread mobile wallet adoption is still far off, the market will not end up being a false hope. McKee acknowledges that, of those using mobile wallets today, the frequency of use is quite low: 73 percent are doing so fewer than five times per month. “Clearly, the way we pay for goods and services is not slated to change anytime soon,” McKee says. “But although cash and cards may enjoy dominance for some time, with fully two-thirds of consumers remaining interested, it's important to recognize that the mobile wallet is far more of a latent opportunity than a pipe dream."

In the current market, the report has found that PayPal is leading the mobile wallet race, as 15 percent of consumers have used its application in the past month to make an in-store purchase. PayPal is even beating out Google, with at least four times the adoption. Though perhaps this isn’t surprising news; an Internet Retailer article argued PayPal would be the model player in the future of mobile wallet payments, rather than Google and Isis — two key players evaluated in the Yankee Group report. There will only continue to be more players, McKee says. “As with all industries focused on a new technology, the mobile wallet space is characterized by high levels of saturation and an all-out arms race to proliferate. This, of course, is a significant factor inhibiting uptake.” However, over the next three to five years, McKee expects more merchants and consumers will begin adopting the technology, with only a few mobile wallets emerging as leaders in the industry.

In order to further drive adoption, McKee says delivering personalized deals and using the mobile wallet to target consumers with customized offers could help snare more customers, especially as personalization becomes more in demand.

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