Australians: What’s in your ‘digital wallet’?
Pretty soon, it could be the entire contents of your physical wallet, digitised. From loyalty cards and rewards programs to transit tickets, IDs and more. The digital or ‘eWallet’ is on the rise and is changing the way Australians are spending money throughout the country.
As far as global digital payments go, Australia’s rates of adoption are on the rise. According to a report by CapGemini, Australian transactions experienced 10% growth in non-cash transactions in 2017, which is up from 8.9% in 2016. These statistics put the country right behind the U.S., South Korea and Denmark, ranking 4th in non-cash transactions per capita.
Other changes are also coming soon to digital wallets in Australia, which will likely speed up the adoption rates for ‘non-cash transactions’ even more. Changes on the horizon include: increased mobility, digitally connected homes, contactless options, wearables and advances in augmented reality.
Even though cash is still used for lower-value transactions and one-off or informal purchases, the Reserve Bank of Australia’s Consumer Payments Survey reveals that ‘Australian consumers are increasingly using their debit or credit cards instead of paying cash’. Secure and convenient, all of these non-cash transactions are being streamlined into one digital payment hub – the digital wallet.
From E-Commerce to M-Commerce
Physical environments that accept cash still exist across the country. But, say architects at Warren and Mahoney, retailers are ‘reconfiguring physical environments to match what’s happening online’.
Just as retailers are re-imagining physical environments to match what’s happening online, online payments are doing the same. These re-imagined mobile transactions present the familiarity of physical banking with the ease of mobile-first/mobile-only.
The growing prevalence of mobile payments is apparent in apps like eWallet, that re-think the physical wallet – and then go beyond. The ‘digital wallet’ doesn’t only focus on bringing digital equivalents of physical wallets through cash and cards. eWallet also focuses on translating other financial behaviours, incorporating and integrating actions like linked bank accounts, financial contributions and its management through the app, making for a more streamlined approach.
Apparently, digital wallets see themselves as a ‘hub’ for all the consumer’s needs, centrally located, easily accessible, and integrated.
In Australia, the use of ‘m-commerce’ adds to the ‘e-commerce’ world, with banking and the payment of bills online. These services evolved naturally, and organisations are now offering transaction solutions that call on branded digital wallets, such as eWallet.
Numerous factors have caused the staggering 448% increase in the use of m-commerce services from 2010 to 2013. . Research snapshots by The Australian Communications and Media Authority (ACMA) point to:
- the increased availability and use of mobile phone banking apps and shopping applications
- the availability of 3G, 4G and LTE service networks
- the adoption of mobile-first, moving quickly to a mobile-online culture amongst young people
So, What’s Next?
There’s no doubt about it: Digital payments in Australia are on the rise. Even though banks and financial service providers are still proprietary about their platforms – preferring, instead, to offer customers their customised versions of digital wallets
As can be seen from the above graphic, use of credit and debit cards is declining, especially amongst 25-49-year-olds.
Digital wallets like eWallet can be catalysts to these trends in behavioural changes. Besides facilitating secure bill payments and linking bank accounts for quick access, digital wallets also allow cryptocurrency transactions, the management of claims and financial contributions, as well as more ‘brand’ based actions like loyalty and rewards accumulations and checks.
For digital wallets, such as eWallet, to make it past early adoption and into the mainstream, a variety of factors and influences need to come into play. Obviously, the continued growth of e-commerce and prevalence of the smartphone are two big ones.
But the other aspect that would contribute to their increased use in the next few years will be targeting user behaviour in the real, physical world. In other words, setting up expectations and making users comfortable with the idea of a “digital” wallet. For example, jumping from the use of credit cards to contactless cards, to online payment transfers done via phone is a logical pathway.
So this means that setting up this tap-and-go behaviour and making it a part of consumers’ and users’ everyday eco-systems in another way is a critical step to the adoption of rising digital payments. AusPayNet, which represents commercial banks, the Reserve Bank and a few big retailers, points to the use of tap-and-go payments for public transport as a great way integrate smartphones and apps into everyday use.
In terms of adopting digital payments in a mobile world, here are two major changes that are being introduced:
- Mobile apps allow users to split bills between friends. The functionality of these apps divide the bills and then syncs up with contacts to send texts to the others to enable them to pay the principal person. Each text provides a unique reference number that must be accessed to make the payment. The app then tracks payments so users can verify what’s been done.
- The storing of loyalty cards using apps like eWallet, on a mobile device. Users access and scan these “cards” at checkout.
For now, other significant opportunities rest in the development stage, which can spur on faster adoption. Biometrics and wearables are a part of these opportunities. However, these opportunities also reveal a few ‘issues’.
The first is the idea that the digital wallet can and should comprise four distinct functions that, together, can build an entire ‘experience’ for the mobile-first/mobile-only consumer:
- storing detailed information of the various credit and debit cards a consumer uses
- offers for new payment types
- coupons and loyalty programs integrated and customised according to cards
- real-time, responsive, personal financial management
Tech businesses and banks still clash over the mobile customer experience, and regulators still question the best way to protect consumers with mobile banking and mobile money.
The second is that while adoption rates are indeed on the rise, the share of users adopting digital wallets is lopsided.
For example, B2B, small- and medium-sized enterprises are already comfortable with using digital invoicing, virtual cards, cloud-based finances and accounting software in their everyday transactions. Consumers, on the other hand, are those more responsible for the prevalent use of cash we saw previously.
Part of the ‘solution’ will end up coming from mobile phone creators themselves. For example, the arrival of Apple Pay in the U.S. and then in Australia in 2014 significantly simplified transactions in the country. But even this introduction was fraught with proprietary issues.
These innovations come in increments, however: at first, Apple Pay would only turn smartphones into debit or credit cards if it was American Express. Since its inception, however, the technology has been recognised and accepted by ANZ and 48 other smaller financial institutions.
Next came Google’s Android Pay and then Samsung Pay, cleanly siphoning more than nine million Westpac users and offering service to Citibank and Amex users. And while big banks are still sticking to their own digital wallets, solutions like eWallet can provide major benefits not only to the consumer-facing side but to the businesses, retailers and banks that adopt this technology.
On the business side, apps like eWallet allow those integrating the app for their customers’ use to provide:
- Instant, cross-platform access
- A chance to influence the consumer journey, personalise user experience and gain customer insights into behaviour
- Then, create a relevant marketplace of offers that further deepen customer relations
- Improvements to efficiencies and transparency with transactions
These features align with the above-identified four aspects of or functions of a ‘digital wallet experience.’
One thing is crystal-clear: the physical wallet you own is most definitely inching forwards along the inevitable path to a digital revolution.