Hey Friends,
Americans still strongly rely on the physical wallet. Physical credit cards, ID and insurance cards, even that loyalty card to that frozen yogurt place that closed during COVID, are all jammed into the five or six slots that get stretched out within a month of owning it. You always say you’re going to clean it out, but you never do, because you’re never sure when you need to flash one of those bad boys out. God forbid you miss out on those loyalty points that never accumulate or expire before they can be used.
The wallet reminds me of the key ring tag and the coupon. Outside of fitness centers and maybe the occasional grocer, we were able to kill the key tag, and coupon “cut outs” are all but extinct, but how come the wallet is still thriving (read plaguing)?
As someone who is technology first - I love a good shakeup. I thrive on disruptive technology that makes my life easier, even if there is some headache in the learning curve. While I absolutely hate the thought of menu’s going digital, I’m all-in on mobile pay.
One story I’m tracking is the expansion of Apple Pay outside of just the Apple wallet. Apple announced that with iOS 18.1, developers will gain access to its NFC technology, allowing them to enable contactless transactions within their own apps using the Secure Element (SE) on iPhones. This access extends beyond Apple Pay and Apple Wallet, enabling features such as in-store payments, digital keys (e.g., car, home, and hotel keys), corporate badges, student IDs, loyalty cards, event tickets, and more. Support for government IDs is expected in the future.
Even apple pay competitors are taking advantage of these new features. PayPal is positioned to leverage the iPhone's newly accessible NFC capabilities to potentially develop a mobile wallet for European users. Following Apple's announcement allowing third-party developers access to NFC and Secure Element APIs, PayPal has hinted at plans to enter this space. During a recent earnings call, PayPal CEO Alex Chriss suggested that upcoming NFC changes in Europe present an opportunity for PayPal to develop a mobile wallet for both Android and iPhone. This move would align with PayPal's goal of offering an omnichannel solution, providing both online and offline payment capabilities.
The EU's new Digital Markets Act (DMA) will allow consumers to set third-party wallets, like PayPal's potential offering, as their default on iPhones, further opening opportunities. For PayPal, establishing a fully functional mobile wallet would be a significant step, as the company has long sought to expand into offline retail. Despite past efforts, Apple Pay has maintained dominance, but PayPal sees a new opportunity in Europe, where it has a strong user base.
So what does the current payment landscape look like?
Marqeta's 2024 State of Payments Report. The fifth annual State of Payments Report surveyed 4,000 consumers aged 18 and above in the U.S., U.K., and Australia to examine shifting consumer purchase preferences and their impact on future payment solutions. The report highlights that as Gen Z and Millennials seek modern payment options, brands that can cater to their needs across the entire money lifecycle—pay, keep, spend—will likely see increased customer loyalty. The report emphasizes the importance for companies to stay updated on evolving consumer preferences in the rapidly changing fintech landscape
Key Findings:
1. Contactless Payment Adoption
U.S.: 46% of respondents used contactless payments in the last seven days.
U.K.: 80%
Australia: 69%
Despite a lower adoption rate in the U.S. compared to the U.K. and Australia, there is a clear global trend towards contactless and mobile payments, indicating a shift away from physical payment methods.
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