Digital Wallets Are Poised For Growth – But Adoption Will Be Slower Than You Think

Digital wallets appear to be so compelling – simplifying life for the customer (check), always present (check), location marketing (check), loyalty and rewards (check), multiple payment types (check), digital delivery (check) adoption…hmmm, not so good.

So why are consumers not flocking to the promised land of Apple Pay, Android Pay and other digital wallets?

Well they are...sort of. You have to look to China to see the promise of a wallet fulfilled, where Alipay has left its humble payment origins behind and now moved into smart cities. It lines up alongside the lifestyle platform WeChat; as well as shopping, paying bills and taxes with WeChat Pay, you can also schedule hospital appointments, order a taxi, apply for a visa or file your taxes. The numbers are staggering: according to this article by The Drum, 420 million people used WeChat to send 8.08 billion “red envelope” digital payments over Chinese New Year alone, almost double the transactions that PayPal had during the whole of 2015. But China is a special case – born straight in to a digital world, wallets arrived without legacy, without competition. Head back to the West and you start to understand some of the challenges – highly competitive markets, fragmented providers, disintermediation fears from banks and card issuers, trust issues from consumers – it’s just not China.

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