Forecasting the Future of Digital Wallets

The question of digital wallet acceptance is a tired one – but for many merchants a decision they might want to reconsider.  Stored credentials, defined as a system or service that stores multiple payment methods for use across multiple websites, is not a new concept.  In fact, many would say it’s not even a hot topic in payments anymore.  The technology has been around for several years and while the number of players in the space initially experienced explosive growth, Javelin Research expects a contraction in the number of providers between 2019 and 2021.  To add to this morbid state of things, consumer usage of mobile and digital wallets has barely grown since ApplePay exploded onto the scene with much fanfare but little bite in October 2014.

Why Care About Digital Wallets Now?

Despite the slow adoption of digital wallets, merchants should still be paying VERY close attention.  Just follow the money – there is a reason that the major players continue to invest in these technologies.  Just last month Google announced a rebranding of AndroidPay into the broader set of offerings now labeled as GooglePay.  Amazon, Apple and PayPal/Venmo also continue their focus in this space.

Despite these investments, the simple fact is consumers and merchants will ultimately decide the fate of digital wallets.  But the current state between merchants and consumers is stuck in a chicken-and-egg scenario.  The ROI for merchants wanting to accept new wallets is dependent on that mobile wallet provider having critical mass to justify it.  Consumers will generally only take the time to register a new wallet provider if the wallet accepted at the merchants they transact with regularly.  Many consumers are sitting on the sideline, whether consciously or not, waiting to see how this plays out.  Today’s digital wallets and payment methods simply do not provide enough incentive or incremental convenience to meaningfully overcome traditional plastic methods.

What is a Merchant to Do?

Unfortunately, there isn’t yet a one size fits all answer in the merchant space.  Merchants with payment scale can certainly make an easier case for the investment necessary to add newer payment methods in their arsenal of consumer choice.  Smaller businesses may be relying on Payment Service Providers (PSPs) with non-integrated solutions.  Through aggregation, PSPs achieve the scale to justify investments and offer these choices to their merchant base.  This leaves a major chasm in the bell curve representing the merchant majority.  Except for perhaps the most prolific providers already mentioned, meager project net present values are going to make it difficult to convince the CFO to move forward.

Where are Digital Wallets Going?

The good news here is that market consolidation is already progressing, and the landscape of choices will shrink.  Through a combination of consumer choice, player acquisitions, and merchant adoption, we will see the logical choices emerge.  Consumers, especially the younger groups, appreciate the convenience and added security of using integrated digital wallets compared to swipe, dip, or keyed entry.  For most merchants this means a waiting game.  However, do not simply wait – pay close attention to adoption and usage metrics and begin plotting a course.  Once a path becomes clearer for your business, execute that strategic plan so that you’re ahead of the competition, with the peace of mind knowing that you haven’t invested in losing solutions.


Question or Comments?  Contact Nick Fredrick at



Biometric Authentication: Evolving from Knowing Your Password to Being Your Password

For over 50 years, passwords have served as access controls for technology. Paradoxically, as the technology that we use in our everyday lives has rapidly evolved to meet our every need, passwords and security have largely remained unchanged since their inception. Today, the average American has more than 130 online accounts associated with a single email – many of which use similar, if not identical passwords. Over 80% of people surveyed by SecureAuth said they reuse the same password for multiple accounts; this poses a problem for account security, as the strength of a password decreases the more times it is used across multiple platforms or services, allowing for easier penetration by malicious actors. Luckily, payment providers, retail businesses, and tech companies are beginning to explore the next era of authentication: biometrics.  The best part of the next era – it’s already upon us. To get a glimpse of the future, you simply need to look at your phone.

Advantages and Flexibility of Biometrics

As password security becomes increasingly fragile, and as the number of passwords consumers must keep track of increases exponentially, consumers have been looking to switch to different methods of authenticating their identities. Biometric authentication does not require a reset because there is no way for consumers to lose or forget their authentication method. Transitioning from password-based to biometric authentication is desirable to most consumers, who believe that biometrics are faster and easier than using passwords. Instead of customers typing out a password, consumers can now pay, enter a stadium, or access their online banking with a touch or a glance.

The time savings provided by biometric authentication are evident. The versatility of biometric authentication defines the growth potential of the technology; biometric authentication can extend far beyond getting into a mobile phone or paying for coffee without a card. Biometric authentication could be used to enter a movie theater if an account is associated with a ticket purchase, or to ensure the correct prescription is going to the right person. It can provide iron-clad proof of the identity of someone who is trying to gain access to a bank account or any other sensitive data. There are abundant uses for the technology, and we have just begun to scratch the surface of uses for biometric authentication.

Barriers to Adoption

 Even with all the benefits of biometric authentication, critics still warn of the negative impacts of widespread adoption. For the most part, however, consumers are willing to sacrifice the shortcomings of biometric authentication for the convenience that it provides.

Currently, passwords are inherently private. Since we use secret passwords, outside entities are not supposed to know them. However, moving from passwords to biometrics essentially moves from securing the private to securing the public; biometric information is public because it is on display on our bodies everywhere we go, all the time. With any use of personal or private information comes the need to regulate the use of that data to protect consumers.

Since the use of biometrics is relatively new and quickly expanding, minimal regulation surrounding its use is in place today. The lack of regulation leads to questions surrounding the classification and security of biometric information such a how do we categorize biometric information, and how do we secure this fixed information? Is there a need to establish the equivalent of PCI to secure biometric information, and does it fall under HIPPA, even if the consumer consents to the use of their information? Who will be responsible for the management and security? Will the government handle our data and communicate with every organization that uses it, or will each organization keep and secure their own copy of everyone’s information? Each scenario presents opportunities for malicious attacks, and although there is no current evidence for using digital biometric signatures for anything other than stealing and keeping it, as time passes and ways of unmasking the data become a reality, our identities could be compromised permanently.

Privacy concerns pose a highly-debated barrier to biometrics. A current example of the use of biometrics in infrastructure is India’s biometric database for its 1.3 billion citizens. This database can be used for services ranging from paying taxes, to collecting welfare, but there is fear that India is infringing on the rights of its citizens by making enrollment in the database mandatory. Where do we draw the line concerning user privacy? What attributes are fair game for collection and analysis and what crosses the line to knowing too much about the user and their behaviors? How can the custodians of this data ensure that is protected and rendered useless if stolen? As biometric authentication becomes ubiquitous, we will need to seriously consider what data is being collected, how it is being used, and how it can be secured.

The Assured Spread of Biometric Authentication

Regardless of whether you have a positive or negative attitude towards biometric authentication, the technology is here to stay. The ease of use and security tied to it allows for any process, service, or device which requires user authentication. With the growth in device connectivity and the boom of the Internet of Things (IoT), more devices will interface with our lives and have capabilities that require identity verification. Consumers will not want to take the time to enter a password on every device that they interact with. It is not difficult to consider a future in which some devices may not even have keys to enter a password, but instead perform voice recognition, retina scanning, or any other biometric authentication method to validate the user.

No matter how secure biometric authentication is, the adoption of it is still subject to consumer preferences and business system readiness. Even with advances in tokenization, there are a plethora of privacy concerns and legal ramifications for holding biological markers of consumers. Even though the path for biometric authentication isn’t set in stone, we will be paying attention to the spread of the technology. Before diving headfirst into accepting biometric authentication as a part of our everyday lives, a thorough analysis of infrastructure, regulation, and security requirements will be required.

For further discussion, contact Mason Zurovchak at

Is Your App Best for the Job?

Customers install your app hoping to complete a task to achieve a desired outcome. Harvard professor Clayton M. Christensen describes this as a Job to be Done in his book, Competing Against Luck: The Story of Innovation and Customer Choice.1 He defines the Job to be Done as the “progress that a person is trying to do in a particular circumstance.” This approach directs your focus away from your app features and the underlying technologies to an understanding of why customers would hire your app to do a job and deliver the desired outcome.

As Christensen share his Jobs to be Done theory, he raises questions that can be adapted to help retailers determine whether their app is best for the job. As an exercise, assemble your app team and work through these questions to build your understanding of customers to ensure they will hire your app for the Job to be Done.

  • What progress is the customer trying to achieve? How do they measure progress?
  • What are the functional, social and emotional dimensions of the desired progress?
  • What are the circumstances of their struggle? Who, when, where, while doing what?
  • What barriers are preventing customers from making their desired progress?
  • Are customers making do with imperfect solutions through some kind of compensating behavior?
  • How would customers define what “quality” means for a better solution, and what tradeoffs are they willing to make? Speed? Number of steps? Higher cost?
  • Are customers buying and using a solution that imperfectly performs the job?
  • How will customers know your solution is available? How can you demonstrate that your app will best do the job?
  • Is the customer cobbling together a workaround solution involving multiple products or services? Can your app provide a single platform to do the job?
  • Are customers doing anything to solve their dilemma?
  • Do you understand the real reason why your customers choose your app or why they chose something else? A manual solution? Maintain the status quo?
  • How does your app help customers make progress in their lives? In which circumstances will your app help them make that progress?
  • What are the experiences customers seek in order to make progress? Can you deliver that experience better than the alternatives?
  • What is competing with your app to address the job to be done? Are there competitors outside of those included in the traditional view of your industry? A digital disruptor?
  • What does your understanding of your customers’ job to be done reveal about the real competition your app is facing?
  • Who is not using your app today? What’s getting in the way of non-customers from using your app? How do their jobs differ from those of your current customers?
  • What solution do customers have to fire so they can hire your app? Do you offer enough improvement to motivate them to fire their current solution?

With the new understanding of your customers gained by working through these questions, is your app best for the job? If it’s not, how could you change your app so it is?

If you would like to learn more or discuss your answers to these questions, including what happens after you answer these questions, you can reach out to Kevin Struthers at

1Christensen, Clayton M., et al. Competing Against Luck: The Story of Innovation and Customer   Choice (Kindle Edition). New York: HarperBusiness, an Imprint of HarperCollins Publishers, 2016.