What's in Your Mobile Wallet

The rise of mobile wallets

The world of payments is changing, but consumer expectations haven’t. That is, consumers still expect a seamless payment/checkout experience, with the same (or better) level of security that they have long enjoyed. So it’s notable that U.S. merchants and consumers have been relatively slow to integrate “chip” cards and EMV-compliant POS systems a level of change that might soon seem quaint compared to the payment processing developments that are just around the corner.  

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What's in Your Mobile Wallet?

Feb 5, 2018

What's in Your Mobile Wallet

The rise of mobile wallets

The world of payments is changing, but consumer expectations haven’t. That is, consumers still expect a seamless payment/checkout experience, with the same (or better) level of security that they have long enjoyed. So it’s notable that U.S. merchants and consumers have been relatively slow to integrate “chip” cards and EMV-compliant POS systems a level of change that might soon seem quaint compared to the payment processing developments that are just around the corner.

Coming soon: A cashless society?

For one, it’s likely that the trend towards a cashless society will continue unabated. In our 2016 U.S. Consumer Payment Study, only 11 percent of respondents expressed a preference for paying with cash, with the overwhelming majority preferring credit and debit cards. Yet most consumers haven’t yet made the transition to a mobile wallet (only 44 percent of respondents in our Study reported loading card info to a smartphone or digital wallet), instead preferring to pay using their credit and debit cards with traditional and mobile point-of-sale (POS) devices. Perhaps that’s because just 36 percent of merchants in a survey conducted by Forrester Research currently accept digital wallets.

The rise of mobile wallets

But it seems inevitable that usage of and merchant acceptance of mobile wallets is going to increase over time, in part because they are convenient for shoppers and reduce the amount of time it takes to complete a transaction. Mobile wallets use a NearField Communication (NFC) chip, so making a payment is as simple as tapping your smartphone, smartwatch, or tablet to a NFC-enabled payment terminal. There’s no need to carry around a physical wallet with multiple credit and debit cards; instead you download a mobile wallet app to your phone or other compatible mobile device and load in your card information. Then you simply select the form of payment you want to use when you’re checking out.

Mobile wallets are also more secure than carrying around cash or credit cards. “That’s because information stored in mobile wallets is encrypted,” notes Consumer Reports. “When mobile wallets transmit data to make payments, they never transmit your actual account numbers. Instead, they use encrypted payment codes. And your phone can't be opened without your fingerprint or a personal identification number, so getting to your data is much tougher than opening up your wallet or pocketbook.”

Popular mobile wallets

As for choosing a mobile wallet, well, it’s mostly a matter of personal preference—and often driven by the device you own, as three of the most popular mobile wallets (Apple Pay, Android Pay, and Samsung Pay) are device or operating system specific, notes Investopedia. Meanwhile, some big brands with large and loyal followings have developed their own payment apps, as is the case with Starbucks and WalMart Inc., the latter of which offers WalMart Pay.

In the future, we’re likely to see more and more “niche” mobile wallets, a pair of which are highlighted in the aforementioned Investopedia article. One of the two, Venmo, is popular among millennials, who typically use the app to make payments to friends (think: paying a friend for your share of a lunch or dinner). Another is eWallet, which Investopedia describes as a “true mobile wallet in that it can store everything from passports and insurance cards to loyalty programs and library cards,” not to mention credit and debit cards.

Bitcoin mobile wallets

Meanwhile, you probably already have a friend, relative, neighbor or three who has a mobile wallet that they use to send and receive bitcoin, with Mycelium being one prominent example. Bitcoin mobile wallets are outliers as compared to all the other above-described examples. Like more traditional mobile wallets, they are typically convenient, free, and easy-to-use, but present significant security risks and challenges that are beyond the scope of the discussion here. 

That’s why if you ask a typical bitcoin owner, “What’s in your bitcoin mobile wallet?” they’ll probably come back with an answer like, “not much.” Most bitcoin enthusiasts store the lion’s share of their bitcoin (not to mention other digital currencies) using desktop, hardware, and/or paper wallets, as those are generally more secure options at this point in time.

TSYS offers NFC-enabled payment solutions

If you’d like to learn more about TSYS’ NFC-enabled payment solutions, contact us at 1.888.845.9457. We’re here to help you stay up-to-date on the latest payment processing tools and technology.

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