More consumers are than ever before interested in using mobile wallets, but many struggle to gain traction due to limited merchant acceptance and inconsistent customer experience, according to the results of a study that examined 20 prominent mobile wallet products conducted by Carlisle & Gallagher Group.
The firm evaluated and scored twenty mobile wallet offerings, grouping them into 4 categories: Tech Titans, which include Apple Passbook, Google Wallet and LevelUp; Merchants, such as Amazon, Dunkin Donuts and Starbucks; Card Associations like AMEX Serve, Master Card PayPass Wallet and Visa V.me; and five banks, which were not named due to confidentiality agreements.
According to Carlisle & Gallagher, the selected wallets were then scored on two dimensions, payment capabilities and customer experience. The firm defined a mobile wallet as "an app for a consumer’s smartphone or tablet that allows the consumer to organize an assortment of payment cards, coupons, loyalty credentials, vouchers and/or identification to facilitate financial transactions."
Among the trends the report noted were that financial institution wallets scored highly on customer experience, but scored low on payment capability.
Wallets from the "tech titans" also received mixed reviews. LevelUp and Square were judged to offer wallets that are easy to set-up, manage and use, while PayPal and Google offered competitive wallet solutions with added security and functionality, the report claimed. On the other hand, wallets from these group suffered from lack of merchant acceptance and inconsistent customer experience.
Merchant-owned wallets scored highly on customer experience, but received low scores for only offering in-store, closed loop payment solutions. Wallets from card associations fared the poorest, with Carlisle & Gallagher reporting that the majority of card association wallets are still in development or just emerging.
For financial institutions to become leaders in the mobile wallet space, the report suggests they must be more than a transaction card replacement. "The right combination of shopping enhancements and other “WOW” features have to make the customer experience better," the report states.
Also, financial institutions should work to update their people, processes and technical systems to optimize flexibility and adaptability; and aggressively leverage their relationships with customers and potential partners in a way that optimizes the overall long term profitability for the bank, the report states.
Finally, Carlisle & Gallagher recommend that when it comes to mobile wallets, financial institutions should not only be open to multiple partnerships, but actively work to improve their own ability to start and manage new relationships with the right companies.
Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio