Digital wallets near mainstream acceptance, study finds

Consumers around the world are using digital wallets more frequently and in more places, according to the J.D. Power 2024 Digital Wallet Satisfaction Study, published March 22, 2024. Based on a survey of 3,957 consumers between September and November 2023, the study found digital wallet usage outpacing other payment methods by 5 percent in ecommerce and 6 percent in mobile commerce transactions, compared to the same period in 2023.

Miles Tullo, managing director of financial services at J.D. Power and author of the study, suggested that online and mobile commerce growth will continue to drive consumer adoption and merchant acceptance of digital wallets across myriad points of interaction.

"The race is on to get merchants to accept digital wallets, like Apple Pay, Samsung Pay and others," he said. "Large merchants are converting as demand increases and small merchants have begun to accept these payment methods in stores, mobile apps and online."

Convenience, ease of use

Tullo noted that the benchmarking study profiled the digital wallet experience at physical and digital points of sale, identifying dominant factors driving customer satisfaction. Convenience and ease of use have helped make digital wallets the fastest-growing payment method in the United States, he added, citing the following highlights from the report:

• Small merchant acceptance: While 94 percent of small and midsize businesses (SMBs) currently accept credit cards, only 57 percent accept digital wallets. Seventy-nine percent of the SMB cohort had favorable impressions of digital wallets due to fast transaction speeds and customer demand.

• Large merchant acceptance: Some large merchants offer wallets that can be used online but not in stores. Researchers found digital wallets are not as universally accepted as credit cards.

• Consumer adoption: Forty-eight percent of U.S. consumers surveyed had used a digital wallet in the past 90 days, a 12 percentage point increase from 2023.

• Dominant brands: Among frequent digital wallet users, 40 percent used PayPal; 28 percent used Apple Pay; 22 percent used Venmo; and 19 percent used Cash App Pay.

• Highest transaction volumes: Among frequent users who access digital wallets at least once a month, Venmo and Cash App Pay had highest overall volumes. Among power users, who access digital wallets five times per month or more, Apple Pay was the most frequently used service.

Room for improvement

With digital wallet usage rates and customer satisfaction scores climbing ever higher, J.D. Power researchers characterized the space as far from mature, with room for improvement in merchant acceptance and incentive programs by digital wallet providers that would further drive customer adoption, engagement and frequency of use.

"The lack of perks associated with digital wallet providers, such as rewards programs or merchant discounts, is also a problem," researchers wrote. "Among the most important drivers of customer satisfaction with digital wallet providers, such as ease of use and security of account information, scores are lowest for perks. These gaps mean that customer loyalty is hard to secure in this space, with just 34% of customers indicating that they 'definitely will not' switch brands."

Additional information about the J.D. Power 2024 Digital Wallet Satisfaction Study is available at jdpower.com/business/digital-wallet-satisfaction-study.

Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.

Notice to readers: These are archived articles. Contact information, links and other details may be out of date. We regret any inconvenience.