Wallets turn digital.
19 April 2021
There is a certain symmetry to the development of the digital wallet that goes along with the eventual consolidation of anything and everything on the web. At one time all merchants had their own wallets used to consummate the buyer transaction. Coca Cola is often credited for inventing the first digital wallet in 1997, working from ideas originated by Sam Pitroda, who had invented the first digital diary in the 1970s. The current world pandemic has added urgency to the further development of the digital wallet as the move away from cash accelerates. This acceleration for P2P payments has extended into B2B payments as the criteria and payment processes blend into the simplest user experience possible. The convenience and security of the digital wallet far outweighs the old legacy payment systems with mobility the chief benchmark for generations to follow.
The Juniper whitepaper, Digital Wallets - Transforming The Way We Pay summarises many of the influences of change and forecasts dramatic growth for the digital wallet. They define a digital wallet as ‘a software- based system that securely stores user’s payment information and passwords for many payment methods and websites in one location.’
The last decade has seen enormous development in the digital wallet, turning it into a secure mobile bank, allowing transactions without the need to go to a teller and withdraw cash. The current generations would not know what a teller looks like or even where to find a bank indicating the ubiquitous nature of the mobile wallet today. As the first major company to launch a mobile wallet Google quickly had competition from the likes of Apple, PayPal, Samsung, WeChat, Venmo, Alipay and Rakuten. With many countries looking for cash alternatives, after finding COVID surviving on bank notes for 28 days, digital wallets have been added to the health and safety aspects of today’s consumer landscape.
Globally the digital wallet is structured in two ways, open and closed. The closed wallet is the original Coca Cola idea of just being able to buy from one merchant. This creates a closed environment with greater control for the merchant, along with the ability to provide incentives like loyalty programs, considering how well Starbucks operate within their own environment. The flip side to this is the open wallet of Apple and Google, which threaten the control and the ownership of the client but provides the immense freedom to use only one system to pay many. The Juniper research suggests there is still pushback for the open wallet from many merchants who don’t want to lose the relationship they have with their clients and customers, saying it could take years for a more consolidated view.
With forecast digital wallet spend to be in excess of $10T by 2025, the wallet will become so integrated in our lives, it will be the only instrument to transact with online and otherwise.
You can also access whitepaper by clicking on the below -