Digital Wallets and Bitcoin Wallets Face Lack of Trust and Security Concerns From Consumers
Also read: FinTech Innovation is Not Centralized, Blockchain Technology Could Be The Key To Success
Convenience & Practicality Are A Big Questionmark
Most of the digital wallets – related to digital currency at least – are focused on the mobile space, allowing customers to use the device carried around at all times to pay for goods and services. However, it seems like that convenience and practicality is far from enough, as consumers demand other things from their digital wallets.
While people hammer the fact that digital wallets are “faster and easier to use compared to traditional means”, the question becomes whether or not people are actually looking for a better solution. Especially in the field of Bitcoin, industry experts feel that this technology is ahead of its time, and tries to solve a problem most people won’t even acknowledge to exist.
Especially when comparing digital payments on a phone versus using a credit or debit card, there is no notable advantage for the consumer. Granted, the merchant will pay fewer fees processing digital payments, but that’s not something the average consumer cares about. In fact, there is no real incentive for customers to use digital payments at all at the moment.
On the topic of convenience, there are a few important reasons why people use physical wallets. Not just to hold all of their cards and fiat currency, but also to stash away government-issued ID, driver’s license, and even important receipts. Most of these things can be achieved on a mobile device as well, but consumers will need to provide a valid form of identification at any time. Digital copies of your ID are not considered “legal” in any country in the world at this time.
Concerns About Its Security Due To Lack of Trust
It goes without saying that most consumers simply do not trust the idea of storing all of their personal and financial data in digital format. The missing link between digital wallet providers and consumers is a combination of lack of education, security concerns and general distrust. Bitcoin is suffering from the same fate, which is why more educational efforts on a consumer level are needed sooner rather than later.
There is a note to be made regarding those security concerns, though. Consumers do not fear the digital wallet product itself, but they are rather wary of the companies developing these products. The mobile platform itself is not viewed as a safe way to store either personal or financial information at all times. On top of that, cellphone carriers are not given a lot of trust from consumers either, as they fear carriers will obtain a copy of these details to sell it to third party advertisers.
Do not be mistaken in thinking that the same group of consumers has more trust in the federal government. In fact, the statistical numbers are nearly identical, as trust in both the government and cellphone carriers is dropping to all-time lows. The recent scandals regarding mass surveillance and spying on citizens all around the world are not doing either party any favors.
On top of that, traditional financial institutions – also known as banks – are more trustworthy than both the cellphone carriers and government combined. However, with only 60% of consumers indicating to trust their bank with sensitive information, there is no reason to celebrate just yet. Having the trust of six in ten consumers regarding security and privacy is nothing to be proud of in this day and age.
Even though there are quite a few people who do trust the cellphone platform as a way to operate digital wallets containing all of their sensitive information, there is still a lack of value for using them. Most consumers remain extremely unlikely to start using a digital wallet anytime soon, whereas only 4% of them have responded positively to the idea of using a digital wallet in the next 12 months.
The Road Ahead for Digital Wallets
It is crystal clear that digital wallets have a long way to go before they can win over consumers en masse. In the world of Bitcoin, most of the digital wallets are focused on the consumer, and not on the merchant or payment processor like with traditional digital wallets. That being said, both sides could learn a few valuable tricks from each other as time progresses.
One major aspect both traditional digital wallets and Bitcoin wallets is that neither seems to make the customer feel special. Our current society makes customers feel special wherever they shop, due to loyalty programs, cash back rewards and weekly discounts on various products and services. All of this has yet to translate properly to the world of digital and Bitcoin payments.
Coming up with faster ways for consumers to spend their money is not the key issue. In fact, most consumers would love to see more ways of being forced to spend less, while not diminishing the convenience and ease-of-use of payments. Plus, all most consumers want is the best price for a product at any given time, preferably a coupon as well, and even a cheaper alternative when available.
Most Bitcoin wallets provide an easier way to manage consumer’s personal finances. Detailed transaction history, including the time, date and amount per transaction are visible to all users. However, they lack the convenient option of installing spending limits, even though that feature is being looked at by multiple developers at this time.
Both traditional digital wallets and Bitcoin wallets can learn a thing or two from popular services such as Alipay and WeChat. Both of these wallets made a major impact during the Chinese New Year celebration as they combined red envelope giveaways with social integration and media events.
What are your thoughts on digital/Bitcoin wallets, and how can they be improved? Let us know in the comments below!
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