Digital Wallet Opportunity
We are now living in a digital age where virtual goods are increasingly replacing physical goods these days. We have all seen how televisions revolutionized the media and entertainment sector by bringing music and theatres from physical to digital world, where with a simple touch of a button customers can now enjoy music, movies, and games while sitting comfortably at their homes.
Then came the digitalization of information, through Internet. This redefined the whole meaning of information access, where customers could now have access to unlimited source of information from virtually anywhere, without having to go to libraries or reading physical books.
This digitalization of goods has unlocked the potential of how we look at our bulky physical wallets into whole new way. Present day physical wallets, which are full of your payment cards, Identity cards, driving license, health card, Loyalty coupons, Access cards and yes of-course some cash/coins.
What is Digital/Mobile Wallet?
‘Digital wallets’ as we may call it, is like a virtual container in which you can carry multiple things (virtual) in one place. It could be in your Smartphone/mobile, Tab, TV, Gaming Console, PC etc. These new generation wallets can redefine customers shopping experience making it simple and easy to purchase things at stores or at home, without having to pull out card details or cash from their pockets. This
Once the customer’s bank account is securely linked to his/her digital wallets, he/she can easily make contactless payment through NFC enabled mobile device at the merchant store by simply tapping it against the PoS (Point of sale) terminal.
Although payment is an important part but that’s not all it can do. These wallets can bear other crucial customer credentials as well, which includes Identity cards, voters ID, travel & boarding pass, loyalty coupons, cinema tickets, driving license, health cards, access cards and more.
Digital Wallets is a combination of four key things -
- System / electronic Infrastructure
- Software /App
- Device/ medium
- Secured Information (stored in device/ SIM card /Cloud)
Who are the key stakeholders?
There was times when only banks could offer payment services but now with new regulations like EMD (eMoney Directive) which has opened up this market for a lot of new entrants who are enthusiastic to enter into the payments space.
Besides Banks now many Retailers, Telecom operators, Mobile Device companies, Card issuers, Loyalty Scheme providers, security Experts, Independent software Developers are all entering into this territory. Although each of them are ready to fight this Digital Wallet War, but It is understood that to make this idea of Combined Digital Wallets accepted, it needs constant and combined efforts from every one in this ecosystem to bring this to the masses. Here the customer is sitting on top of the value chain with ample choice.
What’s the opportunity here?
Although banks at risk of losing market share as new mobile wallet competitors emerge there is tremendous opportunity for every one. Earlier Garter Research predicted mobile payments will be apx $617 billion market in 2016, compared to $171.5 billion last year (2012). There are signs of increased customer interest in mobile payments.
Digital Wallets are still in its infancy stage but there are clear signs, which shows there is potential. In Japan mobile wallets are common thing (Osaifu-Ketai, meaning ‘Wallet-Mobile’) and there are many pilots and few commercial rollouts in countries including the US, Canada, Germany, France, UK , Netherlands, Italy, Australia, New Zealand, China, Korea, Singapore and others.
Earlier, we had seen biggies like Google, PayPal, ISIS, Sprint launching their wallet services. MasterCard, VISA and AMEX also launched their version on digital wallets and more recently other players like McDonald’s, Starbucks, KFC, Carrefour have joined the race now.
Key Challenges ahead on the road?
With every opportunity there are challenges too and digital wallets isn’t different. Various studies have concluded that SECURITY remains the primary barrier to wide customer adoption of the digital/mobile wallets. One of the leading consultancy firms Accenture had earlier conducted a research, which gathered that apx 70% people believe that mobile payments increase the risk of identity theft and fraud. Besides security, other challenges include –
- Lack of proper awareness among end users
- Lack of enough contactless/NFC PoS (point of sale terminals)
- Need for a consumer behavioral shift
- Interoperability and lack of co-operation among stakeholders
- Lack of clarity among retailers on ROI
- Ambiguity on commission structure and perceived demand
- Hesitancy on the part of other key challenges on the road.
- Regulatory constraints
What will be a Winning Digital Wallet?
We believe that creating a secure, affordable and simple service linked with a strong value proposition for customers and merchants would be the key to creating a winning wallet. A digital wallet, which can carry all that a customer keeps in his real wallet and can enhance his over experience.
What will I learn at the DMW Summit?
Here at this unique “Digital & Mobile Wallet Summit”, we aim to bring together the latest user cases from a wide spectrum of Industry stakeholders, sharing industry best practices, regulatory updates and all that you need to learn from a very high caliber speaker line up.
Here you will obtain inside updates and key facts, which would enable you to align your existing digital/mobile wallet strategies and as well help you expand your market share through forming new business collaborations.