Most consumers still reach for their physical cards or the cash in their wallet at checkout, despite a wealth of data suggesting a clear trend toward the adoption of digital alternatives.
The move will benefit businesses and consumers alike. For both, digital wallets provide greater security. They’re also more convenient, making transactions easier and faster than before.
According to IDEMIA Executive Vice President of the Digital Business Unit Matthew Cole, we’re witnessing an evolution that has already taken place with various other types of credentials. Transit cards and campus access badges, for example, have already gone digital. And that’s eventually going to happen everywhere.
“We’re gradually seeing that digitization of all of the credentials you find in your wallet,” Cole told PYMNTS in an interview. “And that will continue until you see all of the various credentials that are physically in your pocket today, inside a digital wallet. So, you won’t need to carry a physical wallet or even your car keys any longer.”
Cole’s forecast of a brave, new, all-things-digital world is not a bold prediction. Numerous experts and even plenty of non–experts have made similar predictions over the years. And yet, while the technology to completely replace our physical wallets has arrived, most people still lug one around everywhere they go. Data from PYMNTS shows that while 41% of consumers now have a digital card of some sort, physical cards are still far and away more popular.
And they’re going to remain popular for some time to come, Cole said. He said he believes physical and digital wallets will coexist at least until a majority of stores have the infrastructure in place to support the latter. And we’re in for an especially long wait in terms of widespread adoption of digital identities like passports and driver’s licenses.
“The concept makes sense, provided that each time you need to use your license or your passport, the physical infrastructure is there to support it,” he said. “In the case of international travel, that’s going to be a very long time coming.”
So, if we have the tech, what’s stopping us from putting in place the infrastructure it needs? According to Cole, it’s a kind of chicken-or-egg problem. He said a combination of factors has compelled some retailers and government organizations to put the necessary infrastructure to support digital wallets in place, while others have not.
“Some retailers adopted self-checkout infrastructure much more quickly during the pandemic, but not everyone has,” he said. “So, you’re going to need to be able to support all forms of payment for the foreseeable future.”
To drive quicker adoption, Cole said, digital wallet providers need to continue to educate consumers and try to deliver superior experiences.
Cole stressed it’s important to recognize that it won’t be a case of someone creating a one-size-fits-all solution. He pointed out that he uses multiple digital cards. He’ll use his virtual card in his mobile wallet when riding on transit, but if he goes into a store, he still usually pulls out a physical card because it just feels right.
“There’s going to be a combination of options that consumers use, depending on the use case and the transaction they’re making,” Cole said.