All About Mobile Wallet Application Development: Trends, Figures, and Takeaways

A mobile wallet, or eWallet, is primarily a mechanism to facilitate payment and streamline the whole loyalty transaction process. EWallet application development is based on the use of NFC (near field communication) to process a payment transaction. NFC uses radio waves to exchange information, but it is limited to a very small distance (up to 4 inches or 10 centimeters), hence the name.

Today, numerous brands are engaged in eWallet app development. Some digital wallets are free and require just downloading; some are paid and provide extra benefits in addition to storing credit and debit card details. For example, there are eWallets that can hold information on up to 1,500 loyalty programs and let the owner manage their portfolio of loyalty memberships, special offers, and privileges.

Customers’ preferences for particular eWallets often originate from the devices they use. For anyone with an iPhone, the choice is fairly obvious: Apple Wallet, which includes Apple Pay. There are several Android options, the most widely used of which is Android Pay from Google, which has similar functionality to Apple Pay. The holders of PayPal accounts can use the PayPal wallet, which runs equally good on iOS, Android, and Windows Phone. Though the PayPal wallet is primarily for online shopping, more and more stores are starting to accept it. Perhaps for this reason, PayPal wallet became the most popular mobile payment option in 2018, followed by Apple Pay and Visa Checkout.

While we live in a global village, there are some very distinct differences in using mobile wallets, depending on which street you live on and how long you live there.

The Asia-Pacific region is the quickest market to adopt mobile wallet development technologies, which means that staying away from NFC is no longer an option for retailers there. At the same time, European and American merchants still have time to consider the needed technological changes — but not that much time, as only the early bird gets the worm.

China is the pioneer in the usage of eWallets. According to eMarketer, 81.4% of Chinese smartphone users are estimated to access proximity mobile payment apps in 2019, which is nearly half of the country’s population. The growing user base is, for the most part, the clientele of Ant Financial’s Alipay and WeChat Pay, a built-in element of the widely used mobile messaging service WeChat. Alipay and WeChat Pay have evolved far beyond simple eWallets. In Chinese smart cities, Alipay can be even used for birth and marriage registration. WeChat Pay also offers lifestyle options like flight check-ins.

The success of proximity mobile payment adoption in China is explained by the country’s mobile-first culture. The middle class is heavily opening bank accounts at high rates and prefers linking mobile payment accounts rather than signing up for traditional credit cards. This desire for convenience leads to the growth of mobile payments.

The above graph shows that Germany is the second leader in mobile wallet app development and usage that will continue to grow fast (20.1%) in 2019. Yet in 2016 Aimia in their annual “Loyalty Lens” report named Germany a cash-based society, in which only 4% of respondents actually used a digital wallet, and 75% of the population showed little inclination to use one in the future.

So, it looks like a negative attitude to eWallets is not that stable as it seems at first sight. In the turbulent but connected world we live, sentiments can also change rapidly. While Europe, in general, is lagging behind in exchanging their plastic for payment apps, the ease of eWallet use may change some minds.

Overall, the top 10 eWallet adopters are likely to become different in 2019. eMarketer predicts that India (26.4%), Indonesia (24.3%), and Mexico (20.3%) will be the fastest growing markets this year. The main driver for eWallets’ popularity is the focus on adding special POS terminals in retail.

The 2018 Vibes report discovered that 69% of respondents want to start using eWallets for their loyalty cards. No breaking news if we consider the stats above. However, what is really interesting is that the advocates of mobile payments are mostly women (81%) and millennials (89%). The former means that the companies that target mainly women should carefully consider digital loyalty programs. The latter signifies that in the future digital wallets will keep gaining momentum as long as millennials, the advocates of eWallets, become older.

These figures prove that the market of digital wallets is growing and growing fast. But what reasons make people switch to mobile wallets?

There are at least 6 motivators for customers to start using digital wallets.

A digital wallet is a convenient mechanism for aggregating credit and funds available across banks into one space. The traditional wallet, stuffed with cards and paper receipts, will gradually die out (although not right now).

Smart watches can also have the eWallet downloaded to them. Customers don’t even need to have the phone with them.

With some mobile wallets allowing customers to load up to 1,500 loyalty programs, they can manage all memberships, rewards, discounts, and vouchers in one convenient electronic space.

Contact details are stored in the eWallet, so there is no need to go through a long process of filling in or updating personal data. This makes applying for a new loyalty program much sleeker. Customers don’t have to keep (or lose) loyalty cards and remember account details to participate in a loyalty program, which is convenient.

There is no need to swipe two cards at the counter, or for the cashier to ask for a loyalty card. All that happens is that the phone (or watch) is tapped against the device — and the transaction occurs. This is good for both customers and the retailer.

While in-store BLE devices can push special offers and discounts to customers’ beacon-enabled apps, an eWallet can store them against the relevant loyalty program.

The convenience that eWallets bring into purchasing makes them potential drivers of customers’ loyalty. And there is already evidence for this fact.

The two examples above show many merchants underuse a really powerful source for increasing sales. In brief, there are three key benefits of eWallets for retailers.

1. Digital loyalty cards are always with customers so they can’t forget or lose them. Some customers rarely shop, some customers are prone to spontaneous purchasing. With an eWallet, they don’t have to remember to take a card with them every time. They can just pop into a shop, decide to purchase, and still get the loyalty perks. Logically, eWallets prolong the period of participation in a loyalty program.

2. Marketers can use push notifications and reminders via eWallets to let customers know about sales, discounts, and time-sensitive offerings.

3. Brands can go beyond segmentation and understand customers’ preferences at a personal level. EWallets let merchants access more delicate and valuable data and find the answers to the following questions:

• How, when, and why does each customer engage with the brand?
• Do they shop in-store or online, or do they use both options?
• Do they use the catalog and discounts?
• Do they use the store as a showroom and buy online?

Machine learning and big data increase the business advantages of eWallets. For example, facial recognition can help retailers assess the reaction to a particular promo or product. The insights based on a customer’s purchase history allow for creating special offerings, personalized recommendations, and in-store proximity alerts. The only limit to the information that merchants can gather is the understanding of what constitutes the invasion of privacy.

The growth of digital wallets would be even faster if there were no barriers — both psychological and technological. Vibes surveyed customers to find out the most common eWallet concerns.

The most obvious threat is security (59%) as customers are afraid of losing their phones and wearables or having them stolen with all the sensitive data. This concern is not actually objective. All that it takes to keep private data safe is to ensure that both the phone and the app are pin-protected and that they can be disabled remotely. Such simple measures won’t let strangers access customers’ funds. Besides, many eWallets have robust security features that offer better protection than physical plastic cards.

The second stumbling block which worries 19% of respondents is the lack of mobile-ready POS terminals. Though most smartphone models support the NFC technology needed for eWallets, many in-store POS terminals still can’t accept mobile payments. This means that eWallet users have to carry a backup system of cash and a card for cases where the store is not NFC-ready. The one wallet that is not restricted by this is Samsung Pay, which uses MST technology, as well as NFC to complete a transaction. This technology mimics a magnetic stripe swipe. It does not work for POS devices that request card insertion, however.

This challenge requires making POS terminals NFC-compliant and places a burden on both banks and device suppliers. Merchants, in their turn, have to be informed and proactive in requesting the upgrade. While most (but not all) large retailers understand the need, many small merchants are still unaware of the benefits.

Finally, if a retailer has not digitized the loyalty program to an omnichannel model, it is not eWallet ready. The merchant will have to invest in ecommerce development to ensure that customers can take advantage of the program and load it into the digital wallet. They also have to take care of the shopper who is not ready to move to an electronic wallet. If their reward program is being run by a loyalty management company, this should not be an issue, but many smaller retailers will be running a custom program and will need to upgrade their offerings.