The FinTech that makes digital wallets as convenient for in-store transactions as they are for online transactions may have a runaway winner on their hands.
Consumers love convenience so much that they are willing to change their spending habits if the switch offers more ease of use, especially when it comes to checkout. This hunt for convenience has been paramount in consumers’ increased willingness to try new payment methods, especially when it comes to digital wallets. Previous PYMNTS research has found that 41% of consumers would be willing to try digital wallets in the 12 months after being surveyed in May 2022. Nearly half of consumers who tried a new payment method in the 12 months previous to being surveyed cite ease of use as important when trying a new payment method.
Convenience as a driver is undoubtedly a main factor behind the uptick in digital wallet use for online transactions, from bill pay to sports betting. The PYMNTS study, “Digital Economy Payments: The Ascent of Digital Wallets,” details how that convenience driver also extends to online retail purchases, where digital wallets have been making slow but steady gains.
However, these online gains in digital wallet use have not extended to in-store purchases yet.
Some consumers who pay with a digital wallet for online purchases prefer to use other payment methods for in-store transactions. But why? If it’s not a matter of fraud concerns or card-based loyalty offerings such as travel points, then it stands to reason the gap in digital wallet use online and in-person is a matter of convenience. It takes a similar number of steps to complete a transaction at an in-store point of sale using a digital wallet as it does to use a debit or credit card. Until there’s an incentive for shoppers to make the switch, such as a more streamlined checkout process, there’s no reason for them to break the habit of taking out their card instead of their phone at checkout.
However, PYMNTS research demonstrates that consumers are ready to make the switch to digital wallets, even when other payments habits are ingrained. Such is the case with Japan, which experienced the fastest rate of mobile wallet growth for in-store transactions over the course of 2022, experiencing a 20% rise in Q3 2022 alone. The rapid adoption was particularly notable as using cash for retail transactions is still common in the country.
It’s pretty clear: physical cards will remain consumers’ in-store payment option of choice — until digital wallets become more convenient. Be it through hardware or software, the FinTech that can maximize the convenience of digital wallet checkouts may reap the benefits.