by Jason Holderness
As the digital payments industry has grown, so has the use of mobile wallets. And for good reason.
Mobile wallets offer increased security which has led to rising levels of trust, positively contributing to a growing number of users, according to recent studies.
In a March blog entitled Trust Rising Among Mobile Wallet Users, National Merchants Association highlighted the benefits of mobile wallets mentioning that, “While this type of payment method is convenient for both consumers and merchants, much of the increased usage of digital wallets is due to improved security measures which has created higher levels of trust among users across the globe.”
This trust has led to high numbers of global consumers (more than 80%) that believe their mobile wallet data is secure, which is nearly twice the number of consumers that trust businesses to protect their sensitive personal data, according to new research from ACI Worldwide.
Increased use makes sense, especially since trust has been established. But why has trust been established and why exactly are mobile wallets so secure?
For starters, mobile wallets aren’t necessarily new bank or credit accounts; they are simply convenient digital spaces to store existing payment information. So, not only are they popular because they add layers of security that protect electronic transactions, they’re also gaining favor with users because they provide added convenience, according to Ahmad Raza, founder of the design and branding company, Samurais.co, in a February article published in the Huffington Post.
Raza claims that a mobile wallet essentially transforms a smartphone into a “bank teller,” mentioning that, “Capital One, Bank of America, Wells Fargo, and other financial institutions are currently rolling out their own unique versions of mobile wallets,” similar to other popular wallets like Apple Pay, PayPal, and others.
Digitally storing financial details in a mobile wallet is also advantageous in the unfortunate case an actual wallet or purse is misplaced or stolen. Nearly 39% of consumers in a recent Capital One Rewards Card Outlook survey thought they lost or misplaced a credit card in the past year, proving that losing a card is quite common. Similarly, consumers face the risk of stolen cards and debit/credit card numbers all the time and storing that type of data in a smart phone that has built-in privacy features including “lockable” screens is much safer.
To prevent unwanted access, mobile wallet apps are password-protected with some offering biometric protocols (like Apple Pay’s “Touch ID”). Enhanced security features found in certain wallets include a card holder’s ability to disable a connected card in case it is misplaced or lost as well as instant purchase notifications, which can alert users to suspicious activity in real-time. These types of alerts can help prevent future fraudulent payments from being approved until a card holder has made a digital approval, thus validating a purchase.
Lastly, mobile apps can improve the security of a linked account with some of them allowing consumers to electronically scan receipts and store them in separate collection/folder. In a sense, this type of organization helps keep sensitive information in one place, where a key document can be easily retrieved the moment it’s needed.
Mobile wallets are quickly becoming the preferred method of payment for a new generation of consumers. Global use is rapidly increasing and merchants are responding to the increased demand, outfitting stores with POS systems and payment terminals designed to accept this form of payment.
With security in the forefront of their minds, consumers around the world continue to use their mobile wallets to pay for goods while continuing to trust these payment systems to keep their sensitive personal data safe. Growing numbers of consumers are realizing these benefits and are using mobile wallets to make faster, safer purchases.
Jason Holderness is the Chief Technology Officer at National Merchants Association and a member of the Forbes Technology Council.