Digital wallets are becoming more popular with consumers using smartphones and other mobile devices to make purchases. Here's why — and how — bankers should be preparing for a future where the use of this payment option is even more widespread.
U.S. consumers are embracing digital payments, which is, in turn, giving a boost to digital wallets. Leaders at banks, credit unions and fintechs should take note and strategize accordingly.
Most people — 64% — now say they use digital wallets at least as much as traditional methods of payment, such as paying with cash or a card, according to a Forbes Advisor survey of 2,000 U.S. consumers with bank accounts. And just over half — 53% — say they use digital wallets even more often than traditional payment methods, the August 2023 survey shows.
The pandemic prompted many people to try contactless payments for the first time, as such options were viewed as more hygienic and, thus, safer. The pandemic also drove up the adoption of mobile banking, which made digital wallets more accessible. Some banks offer their own wallets within their banking apps, along with incentives to encourage use, including cash back, discounts, and exclusive offers.
Digital wallets, which are also sometimes called mobile wallets or e-wallets, store information for bank accounts, cards and loyalty programs in one place. In the survey, 43% of the respondents report having two bank accounts linked to their digital wallet, while 33% say they have linked two debit or credit cards.
When facilitating a transaction on a mobile device, wallets create a unique token, ensuring that card details are not shared with the merchant. So, if that merchant’s system becomes compromised, the payment information remains protected.
How to Prepare for the Increased Use of Digital Wallets
To prepare for the increased use of digital wallets in the next few years, leaders in the banking industry should consider implementing the following strategies.
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