WASHINGTON -- As U.S. consumers use more smartphones and mobile devices, it would seem natural for them to ditch their physical wallets and make digital payments whenever and wherever they could.
But not so fast, said research firm Gallup. While digital wallets--technology that allows users to store credit and debit cards, cash and loyalty cards and coupons to make electronic purchases using a digital device, most often a smartphone--were first introduced as far back as the 1990s, U.S. consumers have yet to readily accept them.
Though Apple is trying to change this trend with Apple Pay, Gallup analysis shows enthusiasm for digital wallets is still low.
Only 13% of U.S. adults with a smartphone have a digital wallet on their device, and 76% of those who have a digital wallet have never used it or have almost never used it to make a purchase from a retailer in the past 30 days. Of the U.S. consumers using a digital wallet, men and millennials use it more than the rest of U.S. adults: 11% of men and 11% of millennials use it every time or almost every time if they can to make a purchase.
Among consumers who have digital wallets, 38% don't see any benefits of using the technology. What's more, nine out of 10 consumers who don't have a digital wallet say they are very unlikely or unlikely to start using one in the next 12 months (91%).
This suggests that providers either lack a strong value proposition or aren't communicating it well to prospective customers. Unless this situation changes, it's hard to imagine many consumers moving beyond considering or experimenting with the technology to become loyal, long-term customers, Gallup said.
Consumers don't seem to be eager to start using digital wallets in the near future, with further analysis suggesting several reasons for their reluctance. More than half of nonusers cite security as a primary reason they're unlikely to use a digital wallet in the next 12 months (55%). Others don't know enough about the technology (21%) or see any benefits of using a digital wallet over just using credit cards (14%), while a few don't think they are accepted at enough places to make the technology useful or worth it (5%).
Though consumers' current enthusiasm for digital wallets is low, the competition in the market is becoming more intense. Apple has already shot to the No. 2 position in market share with the launch of Apple Pay, even though Google and PayPal have been in the digital wallet space longer.
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