FAYETTEVILLE, Ark. – It’s no secret mobile phones serve consumers as more than just a communication device these days.
Smartphones alternate as cameras, navigation tools, encyclopedias and other resources on a daily basis. And as digital devices offer more and more, the more irreplaceable they become to those same consumers.
Enter the digital wallet of the 21st century. Payment options like Apple Pay™, Android Pay™ and Samsung Pay are increasing in popularity among the digital consumer. This means more and more smartphones also are alternating as wallets for many consumers.
This is especially true among Millennials. According to an August 2016 study published in The Financial Brand, 21 percent of these digital natives don’t carry or use cash for purchases, and 53 percent choose to pay only by debit or credit card. The shift in payment preferences is also growing among consumers of other age groups, as they become more familiar with the benefits of using a digital wallet.
Arvest Bank believes mobile payments are an easier and safer form of payment than most consumers realize, and digital wallets have the potential to be the dominant form of payment in the future, although cash and credit will always be options.
The biggest advantage of the digital wallet is convenience. Consumers can leave their traditional wallets at home and use a mobile payment option for everything from ordering coffee to shopping to ride sharing.
The potential for identity theft gives wary consumers pause when it comes to trusting technology with their money, but financial experts say contactless payments are more secure than using cash or a debit or credit card. Whereas cash can be lost or stolen, and debit or credit cards can be compromised, digital wallets offer multiple layers of protection against identity theft.
A customer’s account number that is stored in a digital wallet is never shared with the merchant. Instead, the technology in the phone produces a different code for every transaction, greatly lowering the chance for identity theft. Many digital wallets also require a password or fingerprint to authorize and finalize payment, which is added security in the event a phone is lost or stolen.
Integration with pre-existing loyalty and coupon programs is another driver of mobile payment adoption, and web-based data and statistics company Statista projected mobile payments to rise from less than $10 billion in 2015 to more than $300 billion in 2020 in a recent report.
Similar to mobile phones, digital wallets are becoming more comprehensive in what they offer. As consumers increase their adoption and fuel broader integration among retailers, the future of the digital wallet could expand well beyond users’ expectations.