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Digital Wallet: The next big thing?

Source: phoenix-ux, 11 September 2012

Banks have been using electronic money transfer for a long time now - but the consumer market is still used to having notes and coins.

Introducing credit cards in late 20th century, together with the Information revolution of the past several years has set the scene to what is now a major digital evolution knocking on our doorstep and about to change the way we think of money. For the first time, consumers are about to face a new concept of money: The Digital Wallet. At Phoenix UX we believe that Digital Wallets are the next major step forward in the financial sector, retail and service sector, providing an extra dimension to the current customer service that is provided to your customers/clients.

What do people think of Digital Wallets? What do they know about them? What are their beliefs and attitudes? What is a Digital Wallet? A Digital Wallet is a new concept which is more than just an app on your mobile phone which allows you to pay for goods and services l ike the many payment provider apps out there today. The concept of the Digital wallet is that you don't carry your money, cards etc with you (And let's admit it, it is a mess: Credit card, Debit card, Small change, Receipts). Instead the Digital wallet is incorporated in an everyday object you normally carry with you (like a smartphone) and you use it to pay when purchasing goods/service both in-store or online.

The Digital wallet will have your numerous monetary options configured in it so that you can easily select the option which you want to pay with. Our Research Phoenix UX conducted an online survey on a panel of 204 respondents of varied demographics to find out what the population think of Digital Wallets, if they know what one is, their likelihood to adopt them in the near future and what their reservations would be. From the respondents we surveyed, 65% stated Digital Wallets would be 'very useful' or 'useful' to them. The main reasons cited were it would be quicker, more convenient, easier choice of pay ments an d the fact that they won't need to carry any money, coins or cards with them anymore. 25% of the respondents were unsure whether a Digital Wallet would be useful to them and this was simply because they wanted more information about it. While others questioned whether the technology was needed at this moment in time, or they would not have the capabilities for a Digital Wallet on their 'basic' mobile phones. 11% thought the digital wallet would 'not be useful' or 'definitely not useful' cited a few reasons as to why they feel this way.

The main issue was to do with security/hacking and trust issues. Some respondents mentioned they prefer to have cash on them because they are 'used to it' and there was a fear factor from some respondents as they felt that this could give thieves even more reason to steal their mobile phones. A minority of respondents were concerned about spending too much as they would not have physical money to know when to stop spending. "Wouldn't have to carry cards around with me, especially useful for keeping record of loyalty points/cards etc." "My only reservation would be loss/theft of a mobile phone and its repercussion on unwanted purchase. Otherwise this facility is a superb one". "I would be more likely to overspend and would therefore be a little wary if there were no safeguards such as limits on it to help me control my spending".

The advantages of a Digital wallet to consumers: - An option to offer 'One click shopping' experience and flexible payment methods - No need to worry about keeping track of a physical wallet/cash - Privacy/Password Management - Review purchases across sites if the system is implemented universally - Electronic bill/receipts records - Saves time (No wasting time on re-entering information) - Easier to get a refund to cards used for purchases rather than being forced into store credit because the original card used is forgotten at home 

Possible concerns of a Digital wallet to consumers: - A new concept which deals with money so reliability is unknown - Not yet one universal wallet that can be used on all sitese - The need for WiFi or 3G/4G connection to enable transactions - Possible security issues - The reliability of the technology is yet to be proven The advantages of a Digital wallet to businesses: - Increased efficiency for customers (i.e. less queuing time) thus happy customers - Less impact on resources i.e. staff as processing purchases will be done by customers - Possibility to advertise store offers and upsell during the purchase process - Less physical cash held in-store - Possible concerns of a Digital wallet to businesses: - Cost of implementing infrastructure to support the use of digital wallets, i.e. WiFi and digital presence - The need to adjust to changes in shoppers behaviour which may have an impact on the business model - Possible lack of 'face time' with customers to enable physical upsell of products and services - Possible need to interact with 3rd party vendors to gain shoppers insight and marketing opportunities - Possible need to interact with 3rd party vendors to gain shoppers insight and marketing opportunities - The reliability of the technology Phoenix UX viewpoint on helping you and your customers engage with Digital wallets.

At Phoenix UX our priority is making digital interfaces and concepts useful, usable and engaging. Through the extensive experience in the financial and retail sectors, Phoenix-UX expertise can add value in helping you design a product or a service which matches how people behave in various contexts. Taking into account many concerns users have towards digital wallets, for a digital wallet to succeed it is very important that users (interacting with all its digital touch points) perceive a unified user experience this is defined as: Useful Secured Trustworthy Easy to learn Easy to use Other possible considerations to bear in mind when looking at developing or introducing a Digital Wallet: - The accessibility should be carefully looked at to cater to various types of users in various situations - Distribution of it should be wide and seamless (i.e: via smartphone) - Coverage by many vendors accepting it as payment method - Designing a system where the 'account' or 'profile' is not jeopardising users' privacy, so in cases the digital wallet security is breached there is minimal damage.

The bottom line

Looking at the survey results we can see that there is a great anticipation from the respondents towards Digital wallets with the majority (65%) of the panel surveyed saying that they would use Digital Wallets. According to a recent piece of research by PWC from Dec 2011 consumers have been through a significant shift in behaviour in recent years. Consumers are now narrowing down the number of retailers they do business with, but tend to conduct more business with the ones that they choose across multiple touch points e.g. online vs in-store. Because consumers have more choices of retailers locally and globally, customer experience adds a significant weight to their decision of who to do business with. If you provide them with great customer experience both digitally and non-digitally, they will engage easily with you and you have a better chance of making their 'shoppers shortlist'.

The ability to offer a seamless transition across the various touch points and a customer focussed service will ensure continuous revenue streams. Being able to add another dimension to the way users interact with the online/offline store via Digital wallets will also add further credibility and make shopping less stressful and tedious for some. Keep your cashiers, as there will always be some customers who are less keen on the idea of Digital wallets. Adoption of new innovation always takes times, but the key is, to offer it first over competitors at a level which is useful, usable and engaging thus giving you that competitive edge which other s seek.