Boston Fed team tests mobile and digital wallets

This entry was posted on Monday, April 3rd, 2017.

Elisa Tavilla of the Federal Reserve Bank of Boston has penned a detailed white paper describing a mobile-digital wallet analysis project recently conducted by the financial institution.

The project, which ran from June 2015 – May 2016, saw Boston Fed Team members conduct field research using iPhones and Android mobile phones to make proximity and remote purchases.


As part of the project, team members used the Pay wallets (Apple, Android and Samsung) to make in-store purchases at a variety of merchants, such as supermarkets, pharmacies, department stores, restaurants and taxis.

Overall, says Tavilla, the team observed that merchant acceptance of NFC contactless payments and retail staff familiarity with the mobile wallets increased throughout the project, possibly due to more stores with NFC-enabled readers and robust marketing efforts.

“[Nevertheless], it [was] challenging to determine whether a merchant terminal accepted contactless payments (i.e., if the NFC reader is enabled). In some stores, even if the POS terminal displays a contactless symbol, the reader is not turned on,” Tavilla explained. “The lack of clear marketing creates customer uncertainty about whether they can use a Pay wallet at that merchant location. They may be looking for each Pay wallet’s respective logo instead of a contactless symbol on the POS terminal and hesitate to pay or ask questions, especially when there is a long checkout line.”


Staff training on the Pay wallets varied, even within the same store location, although most employees were aware of the technology and sometimes even assisted customers through the mobile payment process.

“However, in one department store (at different locations and on separate occasions), cashiers told team members that Apple Pay would likely not work despite the mobile wallet’s logo on its POS terminals; yet the transactions were completed successfully,” she continued. “Had the customers not been familiar with the technology, they would have used an alternate form of payment and perhaps been discouraged from trying again.”

As Tavilla emphasizes, the Boston Fed team reported positive experiences when the Pay wallet transaction was successful – receiving printed and emailed receipts, as well as viewing mobile wallet transaction history within the mobile app. In addition, says Tavilla, the team confirmed that mobile wallet awareness continues to increase amongst consumers and merchants. Nevertheless, there is still a need to educate consumers and employees about mobile and digital wallets if mass adoption is to be achieved. Moreover, says Tavilla, offering robust loyalty and rewards features can help to increase adoption by incentivizing consumers to use mobile and digital payments.


“A consumer’s priority is to find a retailer that sells what he wants to buy rather than finding a merchant that accepts a digital or mobile wallet, especially since credit and debit card acceptance is ubiquitous,” she added. “However, with an attractive value proposition (e.g., added convenience, efficiency, security, and/or savings), consumers may prefer to use a mobile or digital wallet if the option is available, leading to more frequent mobile wallet transactions (in-store and remote) that can help build consumer confidence and influence change in behavior.”

As we’ve previously discussed on Rambus Press, mobile payments offer the promise of a convenient “tap and go” frictionless commerce experience that effectively eliminates checkout lines at stores and long queues at bus and train stations. Perhaps not surprisingly, the millennial generation has been the most enthusiastic about adopting the technology. eMarketer estimates that more than a third of millennial smartphone owners will choose mobile payments this year – accounting for more than half of total mobile payment users in the U.S. In addition, a recent survey commissioned by VocaLink found that more than a third of Dutch millennials (36%) and a quarter of UK millennials (25%) are now making mobile payments in-store, online and in-app.

Nevertheless, most mobile wallets do not yet offer a compelling enough reason for the majority of consumers outside the millennial demographic to leave their credit and loyalty cards at home. To accelerate mass adoption of mobile payments, mobile wallets must be part of a new retail future in which an outdated brick-and-mortar paradigm is replaced by a convenient, seamless and interactive shopping experience. As such, mobile wallets should feature single and mixed payment options with gift cards, loyalty points and credit; as well as support NFC-based shopping cart scans, one-click and automatic purchases. This allows shoppers to skip long lines and pay by simply walking past a beacon before exiting the store.

Mobile wallets of the future can also offer pay later options; provide and store digital receipts; display payment history; round up amounts for piggy bank savings; as well as support cash withdrawal (at register) and best price guarantees. To provide value beyond the initial transaction itself, retailers can configure mobile wallets to automatically reward shoppers for in-store spend and pick up, positive product reviews, recommendations and pre-ordering. Similarly, mobile wallet smart coupons enable stores to provide targeted coupons in the form of price reductions, free products, combo offers, bonus points, partner offers, price vouchers, as well as complimentary products and services.

Although typically associated with brick-and- mortar retailers, mobile wallets are also an important aspect of smart travel for transport operators seeking to modernize train and bus systems. Replacing physical smart cards with secure digital travel wallets housed on passenger smartphones allows operators to offer the same ‘shopper friendly’ convenience consumers have come to expect from their smartphones in a transport environment. In addition to allowing passengers to skip long lines at stations, mobile wallets can be configured to support the integration of account-based ticketing, integrated journey planning, trip history logs, real-time updates and third-party offers.

Interested in learning more about mobile wallets? You can check out our Unified Payment Platform here and our eBook on the subject below.

Download Accelerating Mobile Wallet Adoption with Rambus UPP