JPMorgan Chase recently commissioned a thought leadership study penned by Forrester that explores the next phase of digital wallet adoption. According to the study, digital wallet adoption by consumers and merchants is taking a “short break” in preparation for the next wave of progress.
During this break, says Forrester, the digital wallet landscape is preparing for adoption on two fronts. In terms of consumers, moving all shoppers to active use of digital wallets is expected to be an “evolutionary process” of satisfying the demand for features and experience, in addition to transacting safe, flawless payments. Although power users may be ahead of other consumers, the key to mainstream adoption is helping light users and non-users find their way to digital wallets.
Concurrently, says Forrester, merchants are busy getting ready for digital wallets by upgrading infrastructure in preparation for emerging digital payments opportunities – all while exploring various features to improve the customer experience.
“At the end of this break, consumers will be more savvy and demanding and will have higher expectations as they see more capabilities emerge in digital and mobile payments like order ahead, self-service pay and instant coupons and reward redemption,” Forrester analysts explain. “Merchants must be ready to capitalize on the increasing awareness and interest and satisfy the demand for not just a better paying experience, but a better overall shopping experience. Understanding consumers as digital wallet users will help merchants be ready to lead the way to digital wallet adoption.”
In the report, JPMorgan Chase and Forrester also offer a number of key recommendations to accelerate digital wallet adoption. These include emphasizing the security benefits of digital wallets; incorporating compelling features and offers; satisfying power users and helping customers understand which digital wallets retailers accept – and how they can best be used to enhance the shopping experience.
As we’ve previously discussed on Rambus Press, expanding mobile commerce channels and emerging technology are altering expectations of the in-store experience, prompting brick-and-mortar shops to reassess the traditional retail experience. More specifically, retailers must now find new and powerful ways to engage with consumers. Within this context, payments are increasingly being identified not just as a necessary process to be managed, but as a lucrative opportunity.
Indeed, 80% of merchants now see payments as a fundamental part of their business strategy, with 92% expecting to maintain or increase investment over the next 12-18 months. As retailers and merchants expand their payments activity and investment, deploying a branded digital wallet will be a key consideration for many.
In conclusion, it is apparent that a well-executed digital retail wallet deployment can deliver improved payment security, reduced operational costs and increased revenues. Perhaps not surprisingly, the industry is recognizing these benefits and reacting accordingly. More specifically, 451 Research reports that 28% of US merchants are seeking to launch a branded digital wallet within six to twelve months, while a further 18% are considering an implementation without a firm timeframe. The challenge for retailers will be to accelerate time to market and provide a seamless and enhanced experience from the outset. As market demand and consumer expectations evolve, functionality can subsequently be upgraded to meet emerging requirements.