Consumers are adopting digital wallets at an increasing rate. With growing competition and limited space, you need to keep your card front and center to maintain activity.
Digital wallets have been popular with younger generations for years now, but it wasn’t until recently that their adoption became more widespread. Now, they’re gaining ground on plastic cards as the primary way consumers pay for goods and services.
This change to financial transactions comes with a range of benefits – ease of use, security, convenience, etc. – and a new set of challenges card-issuers need to account for to stay even remotely competitive moving forward.
The two primary challenges facing these companies are holding space in digital wallets and securing “top of wallet” space. While there is theoretically more room in digital wallets than in a physical wallet, most people only keep one or two digital cards in their chosen app according to a survey conducted by Marqueta.
How to keep your digital offerings at the top of consumer’s wallets
Convenience is king. Making your offerings as seamless and beneficial to consumers as possible is the best possible way to ensure your product remains a core part of the purchasing process.
You need to meet your customers more than halfway. Making the products you offer feel seamless and an integral part of daily life is the easiest way to turn them into something your customers will use every day. A key factor that separates the top payment options from the rest is integrating loyalty and rewards programs with digital cards. “Loyalty and rewards programs create stickiness, and if these can be seamlessly integrated [into digital cards] it can be very helpful,” said John Mitchell, co-founder and CEO of Episode Six in an interview with The Financial Brand.
Make sure you have a good rewards program in place that makes your customers feel like they’re getting something of quality back for using your product. Equally important is making sure people know what rewards you’re offering, and how they can take advantage of them. Whether you want to add extra incentives for people who add your card to their digital wallets or if you just want to make sure potential customers are aware of the benefits they could receive, conveying that information through ad campaigns, signage in your brick and mortar locations, or a direct mail campaign you need to keep it at the front of people’s minds when they make decisions on which cards to use on a daily basis.
The very first step you have to take if you haven’t already is ensuring that your cards can be loaded into a digital wallet. Far too many banks and credit unions don’t offer this service at all, and more still have yet to integrate their services with core payment options like Apple Pay and Google Wallet. This is a massive and growing market you need to take an active role in being a part of.
Convenience and security fuel the adoption of digital payment options
This survey of consumers in the US, UK, and Australia on their spending and banking habits from 2021-2022 clearly showed that the COVID-19 pandemic played a significant role in this mass increase in the adoption of digital wallets. A reported 64% of respondents in the US used mobile wallets at the end of 2020 compared to 71% in 2022, and 56% of US respondents stated that they felt comfortable leaving their wallets at home, relying solely on their digital options.
A core part of this shift to digital is the general convenience around their use. While it was far from a guarantee your local merchant would have a digital payment option available at checkout in 2019, this option has become close to the norm over the past few years. Advancements in financial technology made it easier to use digital cards, both to load onto your phone and to complete purchases. Gone are the days of meticulously typing your credit card information each time you want to use it online. Now, many banks and wallets allow you to simply take a photo of your card and seamlessly load it in.
On top of general convenience needs, contactless options have also become invaluable as we continue to struggle with the ongoing pandemic. More sellers have contactless payment options at the register, and consumers continue to take safety precautions to keep themselves as safe as possible, especially when it comes to high-traffic areas like checkout registers.
Digital wallets also offer added levels of security that traditional plastic cards simply can’t offer. Digital wallets hold a token of the cards loaded into them, obfuscating the numbers and details on the card itself that are only decrypted after passing through the merchant’s payment device. While security breaches are still possible, digital cards remove the chance of someone sneaking a look at your card number at any point during the payment process. It’s especially hard for a pair of sticky fingers to lift your card, given the intangible nature of digitized information.
Digital wallets are here to stay
This shift to digital payment options has been a hot topic for years now. Forbes covered this change in the marketplace in May of 2021, stating, “Research published in the European Journal of Social Psychology says that forming a new habit takes at least 66 days, on average. However, the study points out there are differences in how long it takes to form a new habit – anywhere from 18 days up to 254 days.”
We’re now well over that 254-day high water mark, and the global trends of digital wallet use are only pointing up. Whether they completely overtake plastic is uncertain, but they are clearly a staple of the banking world moving forwards.
Digital payment options are rapidly changing and adapting to new and old challenges in the marketplace, and keeping ahead of these shifts gives card issuers the best chance to secure and maintain top-of-wallet status. Unifying currency options, including cryptocurrencies, reward points, loyalty benefits, and more all in one place is core to the future of this offering.
Staying ahead of the competition isn’t getting any easier, but it’s far from impossible. Working with the right partners to better understand how to target potential customers, gameplan your next course of action, and keep your products at the forefront of people’s minds is key.
