Mobile wallets have been lurking in the wings for a while now, more as an interesting possibility rather than the ubiquitous payment method that vendors obviously wish them to be.
Mobile wallet popularity is certainly expected to rise over the next four years—the global market for the technology is expected to grow at a 36.8 percent CAGR from 2014-2019— mostly due to efforts from industry giants Google and Apple.
However, there are some lingering challenges that mean mobile wallets are still pretty far from being the go-to payment method for most consumers.
Lack of Awareness
There’s a massive unbanked population of smartphone users that could represent a huge user base for mobile wallets—if only they knew about them. But many people in both developed and developing countries are either unaware of the technology itself, or not fully ready to ditch their physical wallets. This lack of awareness about the benefits of mobile wallets is hindering overall market growth.
Slow Adoption of Mobile Payments
Similarly, there’s also a distinct lack of awareness of mobile payments, especially in developing countries that otherwise have high smartphone adoption.
If the adoption of mobile commerce services does not gain more momentum globally, it runs the risk of slowing down the Global Mobile Wallet Market considerably.
Privacy and Security Concerns
People are getting savvier with the kind of details they put online and how this information is accessed. So it makes sense that many potential mobile wallet customers are wary when it comes to having their financial information available in the digital sphere. Mobile wallet vendors are careful to reassure customers about the security of their services, but this isn’t always enough to sway already timid customers.
Delay in Adoption of Payment Solutions on NFC Handsets
Even though NFC payment is considered significantly more secure than other forms of payment technology (including magnetic strip cards and debit cards) the adoption of NFC payment solutions among consumers using smartphones is still low.
Competition from Alternative Media
Physical cash and cards, as well as online banking are all competing with mobile services for control of your wallet. For many folks who have been using paper and plastic for years, it’s a pretty big jump to all of a sudden switch to a mobile wallet.
Limited Number of POS Terminals
The growth of the Global Mobile Wallet Market is dependent on the demand for and availability of POS terminals that enable cellphone payment. These terminals are expensive, and retailers are only likely to upgrade their infrastructure if there is widespread adoption of contactless payment among consumers.
Though companies such as Orange, AT&T, Nokia, Samsung, Starbucks, and Gemalto have begun trials and pledged support for contactless payment, retailers are yet to make aggressive moves towards upgrading their POS terminals. This inter-dependence among retailers and technology providers is leading to slow growth of the Global Mobile Wallet Market.
