Obstacles to mobile wallet adoption

The smartphone is fast becoming one of the most ubiquitous pieces of technology in our world. Nearly everyone has a mobile phone these days, and increasingly, that mobile phone is an Internet-enabled smartphone capable of performing many more tasks than simply making phone calls.

According to the Pew Research Center, 64 percent of American adults owned a smartphone in 2015, up from just 35 percent in 2011, and that growth in smartphone use continues to grow as more and more Americans adopt the technology. Among younger Americans the penetration is much higher, with 86 percent of people from age 18-29 owning a smartphone, according to the Pew survey.

People are replacing all sorts of devices with their smartphones. Ownership of computers, e-readers and mp3 players are all down amongst the 18-29 year old sect of people as they are ditching disparate pieces of technology for the all-in-one ease of a smartphone. But so far, mobile wallet technologies have not made the same kind of inroads into the marketplace despite the fact that nearly all current smartphones support them.

Lack of penetration
Mobile wallet technologies come in three different types, those created by banks and financial institutions, like credit card issuers; those created by smartphone providers, like Apple, Samsung and Google; and mobile wallets created and distributed by individual retailers, usually those with their own credit cards, like GAP or Macy's. But none of them have had much success infiltrating the marketplace. 

Mobile Payments Today reported that a Blackhawk Network survey found that only 25 percent of mobile phone users had a mobile wallet app installed, and that only 14 percent had actually used the device to make a payment. This is an incredibly low rate considering how important smartphones have become as pieces of daily technology. It seems as though there are a twin set of problems that have inhibited the growth of mobile wallets in the United States.

"Setting up a mobile wallet isn't worth it to consumers if they can't use them wherever they shop."

Acceptance
Another major obstacle to mass adoption of mobile wallet technologies is acceptance. The Blackhawk Networks survey found that 54 percent of mobile wallet users would switch to a mobile wallet if it were accepted everywhere. As of right now, very few point of sale terminals in the United States are capable of using the Near Field Communication that mobile wallet technology runs on. While major retailers often have the technology in place to accept mobile payments, smaller businesses simply have not made the investment. Setting up a mobile wallet isn't worth it to consumers if they can't use them wherever they shop.

Security
The other obstacle is concern over the security of a mobile wallet. According to the same Mobile Payments Today article, a Gallup Survey found that 55 percent of Americans were concerned about security issues like their phone being hacked or lost. With more than half of Americans showing concern over security, it seems that mobile wallet providers will need to address the potential issues, or at least educate their consumers about the features that keep their data secure.