Only 2% of U.S. consumers use digital wallets

Although the day is young and the hype is heavy, American consumers are not very enthusiastic about using digital wallets. High-powered marketers like Apple, Samsung, PayPal and Google are offering their own versions—and with the support of many banks—but only 2 percent of Americans actually use digital wallets.

As this competition intensifies, it's going to be a hard sell to convince people to store their credit and debit cards, cash, loyalty cards and coupons on an electronic device such as their smartphone, according to a Gallup Panel Web study.

Among the study's findings are that engaged customers are more likely to use a digital wallet everywhere, and digital wallet users want to feel special. But right now there aren't very many of them.

While 13 percent of U.S. adults have a digital wallet on their smartphone, 76 percent of those people have either never used it or almost never used it to make a purchase in the last 30 days, according to the Gallup Business Journal. Of the U.S. consumers who use a digital wallet, men and millennials use it more than other people, with 11 percent of men and 11 percent of millennials using it every time, or almost every time, to make a purchase.

"A real contrast exists between these figures and the perceived interest in digital wallets," wrote Sean Williams and Daniela Yu in the blog portion of the Gallup online journal. "Digital wallets receive plenty of attention, but adoption is quite low. While there may be many reasons for the lack of consumer interest, digital wallet providers surely have work to do on their value propositions."

For example, the value of the wallets tends to be promoted as "a fast, easy and secure way to make payments," and "it stores credit, debit and loyalty cards, eliminating the need to carry a physical wallet." But so far the pitches seem to be falling on deaf ears.

"These advantages may sound good, but when broken down and scrutinized, they are not resonating with American smartphone users. And they barely appeal to current consumers of the technology. When asked, 38 percent of respondents with digital wallets say there is no single greatest benefit of using the app," Williams and Yu wrote.

The Google Wallet now leads the pack with 35 percent of the sample, followed by Apple Pay with 24 percent and PayPal with 22 percent. Starting from a low base with significant promotional firepower, this is likely to change fast. The technology and the market are still developing, the study noted.

Reasons for not using a digital wallet include security concerns, noted by 55 percent of consumers, not knowing enough about digital wallets by 21 percent, and not seeing the benefits in using a digital wallet versus cards by 14 percent.

The Gallup study suggests three ways wallet providers can gain more market share:

Make users feel special. Gallup research has consistently found that fully engaged customers buy more from a preferred company when that firm makes them feel special.

Make it easy to do business. Most digital wallet providers promote convenience, enabling people to not carry multiple cards or remember multiple PINs. But the Gallup analysis shows users aren't buying this claim. "Consumers want digital wallets to be easy to install, upgrade, learn and use. They also want easy access to their payment history and past transactions. Perhaps most of all, they want to forgo their multiple credit cards and checkbook to complete their transactions through one—only one—digital wallet," the report said.

Be helpful. Gallup research has found that, "for decades" helpful employees are the key to creating and sustaining customer engagements.

"Digital wallet providers can make life easier for their customers without being boring," Williams and Yu wrote. "Developers should think of how to inspire consumers to change their behaviors to help them reach a personal goal, for example, and reward them for staying on the right course.

"Otherwise, the best that developers can do is reward consumers for changing their payment habits. And based on the low adoption of digital wallets, the value of changing payment habits alone is a very difficult case to make to consumers."

*This story originally appeared in FierceMobileRetail's sister publication, FierceRetailIT.

For more:
-See this article in the Gallup Business Journal 
-Another Gallup Business Journal article
-A blog post in the Gallup Business Journal

Related stories:
Apple Pay on a roll, signs Best Buy, Discover
Target CEO Cornell places big bet on technology
This will be the year of Apple Pay
Trader Joe's testing Apple Pay; Alibaba talking to Apple
Apple Pay vs. CurrentC: the race is on