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Apple Pay and Alipay Show How Digital Wallets Can Surpass Physical Wallets

November 14, 2018

(New York, NY):  Mobile payments may be one step closer to replacing the physical wallet.  Apple Pay and Alipay are continuing to expand their wallets to include much more than just payments—Apple Pay announced students can now carry digital student IDs that can open dorm rooms and function as library cards; Alipay’s users can now use their digital wallets to store digital marriage certificates.

And according to Auriemma Consulting Group’s Mobile Pay Tracker, product expansions like these can increase consumers’ willingness to adopt mobile payments overall. Auriemma’s research revealed that over one-third of mobile payment users would be interested in using mobile payment platforms to store identification cards. The same percentage also said they would be interested in using mobile payment platforms for government documents. This could create major lift in demand for these platforms beyond simply point-of-sale payments.

Apple announced in October 2018 that its wallet will support student IDs at three universities, allowing students to use their phone while doing laundry, going to the gym and taking out library books. While overall mobile payment usage is consistent compared to two years (31% of eligible consumers), developing the habit of using a mobile wallet on campus could have a profound impact on mobile payment usage going forward.

This is especially impactful considering mobile payment users are predominantly millennial (45%) and college-educated (69%). But over the last two years the average age of mobile payment users increased from 37 to 39 years old. The university market represents an opportunity to promote mobile payments to younger consumers, who are most likely to adopt the payment method.

The same month as Apple’s announcement, China’s Alipay joined forces with the Jiangsu province to provide digital marriage certificates for the province’s residents. The digital certificate makes it easier for users to apply for a mortgage, property transfer, or even establish a startup.

Allowing users to safely store digital versions of documents that aren’t always easily accessible— like a Social Security card, passport or birth certificate—positions mobile wallet platforms to surpass what a physical wallet can provide. To move beyond digital storage, mobile payment providers will need to partner with governmental agencies (like Alipay’s partnership with Jiangsu) to add utility, making them valid, accepted alternatives to the physical copy.

“Adding non-payment functionalities to mobile wallets is the next logical step in earning broader consumer acceptance for mobile payments,” says Jaclyn Holmes, Director of Auriemma’s Payment Insights practice. “Smartphones have already consolidated our technologies into a handheld package; using them to store keys, IDs, and government documents will only expand on that mission and push the technology forward.”

Mobile payment users show interest in using mobile wallets beyond the point-of-sale, but it will take some convincing to convert those who don’t use the mobile payment platforms already. While 40% of mobile payment users are interested in using mobile wallets for event tickets, membership cards, and boarding passes, only about 25% of non-users are interested. If mobile pay-eligible consumers had to select a single non-payment wallet addition, however, both users and non-users would pick storing government documents as the top priority.

“These product expansions point the way to how a mobile wallet can transcend the physical wallet—whether it be through providing you access to your apartment, storing documents you’d normally keep at home, or applying coupons directly to your purchase,” says Holmes. “For mobile payments to be successful, they can’t just replace the physical wallet, they need to improve upon it.”

Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma Consulting Group (Auriemma) between July-August 2018, among 1,518 mobile pay eligible consumers. Respondents were screened to own an iPhone 8/8+7/7+/6/6+/6s/6s+/SE/X or Apple Watch (in combination with an iPhone 5/5C/5S) – a Samsung Galaxy S9, S9+, S8, S8 Edge/Edge+, S7, S7 Edge, S7 Active, a Samsung Galaxy S6, S6 Edge/Edge+, S6 Active or Galaxy Note 5, Note 7, or Note 8 – Gear S2 or S3 watch (in combination with an Android/iPhone smartphone) – and/or other Android phone with KitKat (4.4) OS or newer. All respondents also have a general purpose credit card in their own name.

 

About Auriemma Consulting Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, visit us at www.acg.net or call Jaclyn Holmes at (212) 323-7000.