Digital wallet services gain rising acceptance

Tech giants card-less payment services, including Apple Pay, aim to ease the path to the truly digital wallet. (Apple)

Tech giants card-less payment services, including Apple Pay, aim to ease the path to the truly digital wallet. (Apple)

SAN JOSE, Calif. — Money and wallets simply aren’t what they used to be.

Tech giants’ card-less payment services — including Apple Pay, Android Pay from Google and Samsung Pay — aim to ease the path to the truly digital wallet, and researchers project huge growth in adoption by retailers and consumers. Even staid financial giants such as Wells Fargo and Bank of America are behind a push to encourage and enable customers to access ATMs without their debit cards.

Yet the digital wallet business has gotten off to a rough start, said Bay Area-based analyst Trip Chowdhry, managing director with Global Equities Research.

“There have been many false starts in this industry,” Chowdhry said. “The current payment methods are intrusive, and they are not seamless.”

Even so, card-less payment services are here to stay.

“Mobile proximity payments, enabled though near-field-communications, are projected to vastly increase to $118 billion in 2018, up from $3.5 billion in 2014,” according to a report by Statista, a web-based data and statistics company. “Some of the benefits of mobile payments include the speed of payment, the convenience as well as the integration with pre-existing loyalty and coupon programs.”

These benefits point to a brave new world of virtual wallets.

The most common mobile-payment activities include paying bills through a mobile phone or web browser, buying items or digital content remotely with a phone, and paying for goods in a store with a phone, according to the Federal Reserve Bank in a report titled “Consumers and Mobile Financial Services 2016.”

As of December 2016, Apple Pay led the way in North American retailers’ adoption of mobile-payment systems, with 36 percent acceptance, according to Statista. PayPal had 34 percent acceptance, Mastercard PayPass had 25 percent, Android Pay had 24 percent, Visa CheckOut had 20 percent and Samsung Pay had 18 percent, the report said.

One of the next steps, analysts say, is to make payments seamless for the consumer, and to make it easy for shoppers to pick up items in stores without lining up at check stands.

This sort of convenience is already available in a different industry that new technologies have disrupted: “Uber and Lyft enable users to simply get out of the car at the end of the journey, while the app seamlessly processes the fare in the background,” Sunnyvale-based technology company Rambus noted in a report.

The technology providers also need to overcome consumers’ worries about security.

Campbell-based market researcher Creative Strategies recently studied digital wallets to assess barriers to greater adoption of the services.

“We found that fears about security, trusting in the apps, are the primary concerns,” said Ben Bajarin, a principal analyst. “Consumers don’t quite buy the story that they are secure. They are concerned that anything in a digital form can be stolen.”

Bajarin said Apple, Android and Samsung mobile payment technologies all encrypt users’ information, securing their credit card details.

“Compared to a physical credit card or physical wallet that can be stolen, digital wallets are secure,” he said.

Here is a brief look at some of the technology leaders in mobile payments.


Apple Pay is a free digital wallet and mobile payment service that can be used to make in-person payments and is compatible with an array of contact-less terminals. The system is live in 15 countries, including the United States and Canada, along with United Kingdom, France, Russia, China, Japan and several other European and Asian countries.

Q: How many retailers accept your service today?

A: Tens of millions of customers are now using Apple Pay, and more than 13 million contact-less enabled locations exist in the countries where the service is live, Apple said in a statement. More than 4.5 million locations now accept Apple Pay in the U.S.

Retailers that support Apple Pay include Best Buy, B&H Photo, Bloomingdale’s, Chevron, Disney, Dunkin’ Donuts, GameStop, Jamba Juice, Kohl’s, Lucky, McDonald’s, Office Depot, Petco, Sprouts, Staples, KFC, Trader Joe’s, Walgreens and Whole Foods, according to the MacRumors site.

Q: What improvements are you making to the service?

A: Apple didn’t disclose any upcoming upgrades. But Apple Chief Executive Officer Timothy Cook told analysts during a conference call this month: “Apple Pay is experiencing phenomenal traction. We’re seeing strong, growing usage as points of acceptance expand, with transaction volume up 450 percent in the U.S. alone.”


Google developed the Android Pay digital wallet platform to power tap-to-pay purchases on mobile devices so customers can make payments with Android-based phones, tablets, or watches. Android Pay uses the near-field communications technology to exchange bank card information so funds can be transferred to the retailer.

Q: How many retailers accept your service today?

A: “We don’t have this number available to share,” said Genevieve Park, a Google spokeswoman. However, some of the retailers using Android Pay are Best Buy, BJ’s Wholesale Club, Bloomingdale’s, Coca Cola, Dunkin’ Donuts, Game Stop, Jamba Juice, Kentucky Fried Chicken, Macy’s, Meijer, Panera Bread, Subway, Trader Joe’s, Walgreens, Wegmans and Whole Foods.

Q: What improvements are you making to the service?

A: A Google alliance with PayPal enables people to tap their PayPal accounts to make payments using their Android phones; Google has teamed up with multiple banks, including Bank of America and USAA Bank, to add bank cards to the Android Pay platform; and Gmail users can send money as an attachment in an email, the company said in a statement.

“Android Pay is a mobile wallet that allows Android users to save their credit, debit and loyalty cards to their phone and pay easily in-store, in-app, and on the mobile web,” Google said.


Samsung Pay uses near-field communication technology and supports more than 500 banks and credit unions, which together represent more than 85 percent of the U.S. debit card and credit card market.

Q: How many major retailers accept your service today?

A: Samsung Pay works at more than 90 percent of the top 250 retailers and the vast majority of merchants, including small, local businesses, Samsung said. Because Samsung Pay supports both Near-Field Communications (NFC) and Magnetic Secure Transmission (MST) technologies, Samsung Pay is accepted almost anywhere you can swipe or tap your credit card, it said.

Samsung Pay is driving toward the goal of universal merchant acceptance, which is critical to consumer adoption, Samsung said.

Q: What improvements are you making to the service?

A: Samsung has provided new incentives to help customers reach for their phones every time they go through checkout. Samsung Rewards, for example, serves as the loyalty platform for the entire Samsung ecosystem, working much like standard credit card points programs.

“With Samsung Rewards rapidly accelerating consumer adoption of mobile payments, and Samsung Pay’s ability to work almost anywhere you can swipe a credit card unlike other solutions, we know that Samsung Pay is uniquely positioned to lead the mobile payments industry into the future,” said Nana Murugesan, general manager of services and new business at Samsung Electronics America.


Instead of a physical card, customers can now use a mobile Wells Fargo app to choose card-free ATM access and then obtain a one-time token for that session to conduct transactions at the machine.

“Wells Fargo is the first large bank in the U.S. to have card-less ATM technology on our entire fleet,” said Ruben Pulido, a Wells Fargo spokesman.


Bank of America focuses on digital wallets for its card-less ATM services.

“The way we deployed card-less technologies is we are accepting all digital wallets, including Apple Pay, Samsung Pay and Android Pay,” said Charles Liu, chief of branch transformation, ATM innovation and market strategy. “We have enabled this so all of the digital wallets will work with our ATMs. You simply place your phone near an ATM terminal and they communicate with each other.” This sort of access is available at more than half of the Bank of America ATMs in the U.S. and can be activated by uploading the bank card information to a digital wallet.


Macy’s and Bloomingdale’s both accept Apple Pay, Android Pay and Samsung Pay, said Orlando Veras, a spokesman for Macy’s Inc., whose subsidiaries include the two department store chains.

The only digital wallet Walmart accepts is Walmart Wallet, the retailer said in an emailed response.