The use of mobile wallets has increased, but many consumers still prefer to pay with plastic – digital transactions

Consumer adoption of mobile wallets may be increasing, but many consumers still prefer to pay with a physical card, according to a report by JD Power.

The report, which surveyed 3,588 retail bank customers nationwide between Q1 2021 and Q3 2022, found that 49% of consumers surveyed in September 2022: a mobile wallet the previous three months, compared to 38% of respondents in March 2021.

The surge suggests that some of the barriers to mobile wallet adoption and adoption — such as security and ease-of-use concerns — are falling, JD Power says. Safety concerns were raised by 21% of respondents later in the period, compared to 25% at the beginning of the period. Additionally, 5% of consumers surveyed later in the survey period said they found using mobile wallets difficult later in the survey, a slight improvement from 6% at the start of the survey.

The report also found that consumers are more likely to set one up when they become aware of mobile wallets. About 24% of consumers surveyed later said they had heard of mobile wallets but had never set one up, compared to 37% earlier.

Still, 49% of respondents polled in Q3 2022 said they found it easier to pay with a physical credit or debit card than with a mobile wallet, despite increased consumer usage, adoption and awareness compared to 47% of respondents said so in the first quarter of 2021.

A reason that more consumers are finding cards easier to use may lie in the making contactless cards. The report cites data from a Visa Inc. quarterly earnings call last October showing that contactless cards accounted for 28% of US transactions, up from 20% in January.

“Physical cards have continued to resonate with consumers despite changes in consumer behavior and the rise of digital payments in recent years,” said John Cabell, managing director, Payments Intelligence, at JD Power.

Another factor is that Americans tend to be less tech-savvy than consumers in Canada and the European Union, adds Cabell.

Demographics also play a role. baby boomers and Generation Xers are more likely to pay with a physical card compared to younger generations. In the last three months, 38% of consumers over 40 used a mobile wallet, compared to 60% of consumers under 40.

Looking ahead, Cabell anticipates moderate shifts in consumer behavior when it comes to mobile wallets. “We could see shifts of 1-2 percentage points over the next 12 to 18 months, but that’s consistent with what we’ve seen in the past when it comes to mobile wallet usage,” says Cabell. “The changes will be incremental as opposed to leaps and bounds.”