Credit card issuers have long vied for top position in physical wallets. Merchant-branded cards, too, have weathered fickle wallet holders, some faring better than others. Physical wallets that once carried seven or eight choice cards without flinching have been slowly phased out by more diminutive rivals.
Wallets have shrunk in size so they can tuck into small spaces without a trace. This streamlining means fewer cards can fit inside, placing a premium on customer loyalty for coveted wallet space. The battle is also shifting to virtual dimensions as digital wallets begin to step forward. Like the old days, consumers can once again pack wallets to the hilt without fear of squeezing out or losing cards.
"In theory, digital wallets promise a bigger wallet – one that can hold all of your cards, including loyalty and gift cards (the ones we otherwise so easily lose – they never even get into that old-school leather wallet!)," wrote researchers from Packaged Facts. "This is a boon for consumers, who now can actually manage – and manage not to lose – all of their cards – using them when and where they see fit. And it means all cards get a place in the wallet, a boon for their has-beens and the forgotten."
But there is more to the story. According to Packaged Facts latest report, Mobile Payments in the U.S., 5th Edition, by adding automated clearing house (ACH) debit to the mix, some digital wallets may relinquish a spot to what is essentially a check, which eliminates card issuers and networks from the process and further intensifies the battle over digital wallet share.
In another 2016 Packaged Facts study of digital wallet users, researchers found that despite having access to mobile payment options, mobile payers are not using them in volume, a fact substantiated in other research findings.
Among the primary points revealed in the survey, 48 percent of adult smartphone users who had made a mobile POS (mPOS) payment within the past year admitted to carrying fewer cards in their physical wallets as a result. Among survey respondents, the proclivity to carry fewer physical cards to make payments resonated highest among millennials, a trend cited by others as well.
Packaged Facts analysts concluded that the natural selection process occurring right now will continue to narrow the field of cards carried in wallets, both physical and digital, adding a sense of urgency to gaining top of wallet status. Mobile consumers, especially younger generations, have made it imperative, researchers noted.
Here are several follow-up questions posed by Packaged Facts, which may be answered in subsequent surveys:
At some point, mPOS winners will emerge, and consumers' digital wallet payment preferences will solidify to a certain extent. "Growth is not driven by payments in a vacuum; rather, payments solutions are connecting more of the dots (payments, social media, loyalty/rewards, etc.) and doing so more seamlessly, giving consumers more convincing reasons to engage with mobile," Packaged Facts stated.
A MasterCard Worldwide global social listening study, conducted in partnership with Prime Research, found similar results. Researchers analyzed 1.6 million unprompted conversations in 61 markets related to shopping and retail. The top three aspects in the emerging digital payments experience most often discussed were convenience (77 percent), the need to be rewarded for using near field communication (38 percent) and the need for increased acceptance by retailers (21 percent).
"The wave of social engagement we see every time new payment innovations are rolled out truly reflects the demand and desire for new and more convenient ways to pay," said Carlos Menendez, Executive Director for International Markets at MasterCard. "It also shows that payments have really moved into the heart of the shopping experience – causing frustration when not accepted and engagement when fast, easy and personal."
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