Mobile Wallet Usage Is Up, But Many Consumers Still Prefer to Pay With Plastic

Consumer adoption of mobile wallets may be growing, but a lot of consumers still prefer to pay using a physical card, a report from J.D. Power finds.

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

The increase suggests that some of the barriers to mobile-wallet usage and adoption—such as concerns over security and ease of use—are falling, J.D. Power says. When it comes to concerns over security, 21% of respondents expressed such concerns later during the reporting period, down from 25% earlier in the reporting period. In addition, 5% of consumers surveyed later in the survey period said they found mobile wallets difficult to use later in the survey, a slight improvement from 6% earlier during the research.

The report also found that, as consumers become aware of mobile wallets, they are more inclined to set one up. Some 24% of consumers surveyed later said they have heard of mobile wallets, but have never set one up, compared to 37% in the earlier period.

Still, despite gains in consumer usage, adoption, and awareness, 49% of respondents surveyed during the third quarter of 2022 said they found it easier to pay using a physical credit or debit card as opposed to a mobile wallet, compared to 47% who said so during the first quarter of 2021.

One reason more consumers find cards easier to use may lie in the emergence of contactless cards. The report cites data from a Visa Inc. quarterly earnings call last October that show contactless cards accounted for 28% of its U.S. transactions, up from 20% in January.

“Physical cards still have a lot of traction with consumers, despite the changes in consumer behavior and the growth of digital payments the past few years,” says John Cabell, managing director, payments intelligence, for J.D. Power.

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

Demographics also play a role. Baby Boomers and Gen Xers tend to be more inclined to pay using a physical card, compared to younger generations. During the past three months, 38% of consumers over the age of 40 used a mobile wallet, compared to 60% of consumers under the age of 40.

Looking ahead, Cabell expects to see moderate shifts in consumer behavior when it comes to mobile wallets. “We might see shifts of one to two percentage points over the next 12 to 18 months, but that fits with what we’ve seen in the past when it comes to mobile-wallet use,” Cabell says. “The changes will be incremental as opposed to leaps and bounds.”