Digital Wallet Technology - Challenges For The Future

CHALLENGES FOR THE FUTURE

Despite the improvements and the heating competition, digital wallet technology still was largely a novelty by the early 2000s, and it remained to be seen how well vendors could turn such systems into a widespread force in the e-commerce world. Vendors were very conscious of their market's less-than-glorious history. Digital wallets were more often referred to as Internet or Web-based Payment Systems by the early 2000s, in large part to disassociate the products from their rather unsuccessful predecessors in the mid-and late 1990s. One challenge was to adapt Internet Payment Systems to tap into the vibrant business-to-business market. By the early 2000s, most digital wallet systems were designed for the business-to-consumer market.

Customer awareness, or lack thereof, was an irritatingly persistent problem. According to Biz-Rate.com, in 2001 only 38 percent of online shoppers understood how digital wallets worked, 25 percent knew about digital wallets but were unfamiliar with how they worked, and 37 percent of online buyers had never heard of digital wallets at all. Meanwhile, only 22 percent of online shoppers had actually used a digital wallet at least once, and a humbling five percent used them frequently. This last figure, in fact, was equal to the percentage of customers who had used digital wallets at least once and swore they would never use one again. Such results clearly were a concern to vendors and merchants alike.

Still, analysts expected digital wallets to begin taking a firmer hold of the e-commerce market in coming years. In anticipation of more widespread acceptance and use of digital wallets, developers were expanding the capabilities of the technology, allowing customers to use the systems as a mechanism for comparison shopping, product searches, and to check merchant ratings, among other value-added services. With penetration disappointingly slow through the early 2000s, digital-wallet vendors increasingly sought to add such capabilities in order to turn digital wallets into more valuable and holistic e-commerce facilitators.