Digital wallets offer consumers a convenient way to make cardless payments. However, how do UK consumers feel about digital wallet security? Are they comfortable sharing their spending data when using this payment option? Read insights from the second of this two-part series.

How do UK consumers feel about digital wallet security?

In part one of our Digital Wallets Survey, we discovered that digital wallet use has grown to the extent that six out of ten of the 1,004 smartphone owners we interviewed have now used these services. The majority (84%) of current users employ these wallets as debit or credit cards. 

Users can make payments through their devices and manage online spending by using apps such as ApplePay, Google Pay, or PayPal, among others. A benefit of this is that digital wallets can protect banking information and passwords. While this is convenient, as consumers do not need to fill in any personal details, it can raise privacy concerns.

In this second part of the series, we will focus on the habits of the 418 survey respondents who use digital wallets as debit or credit cards when making payments. Additionally, we will delve into their privacy concerns when sharing their ID credentials using this technology and look at the importance of handling sensitive data securely.

You can find the full methodology for conducting this study at the bottom of this article. 

81% of respondents agreed that the pandemic pushed them away from using cash and towards digital payment services. But what digital wallet services did they choose to use?

Consumers can select from a variety of mobile payment apps and can add their bank details to these applications. Apple Pay, Google Pay, and PayPal are the most popular options, though other options like Samsung Pay or payment apps developed by banks are also used. 

However, while 91% of respondents configure their main debit or credit card as a digital wallet, only 1% of respondents use the app from their local bank as their primary means of payment.

What digital wallet do people use for payments and to manage online spending?

Consumers may use different platforms depending on their mobile device, their banks, or other preferences. Retailers could benefit from incorporating point-of-sale (POS) systems with near-field communication (NFC) enabled that can take payments from mobile app services, provided they have configured their POS accounts to accept the card type saved in the wallet. 

What are NFC payments?

NFC stands for near-field communication. It allows phones, tablets, laptops, and other devices to share data with other NFC-equipped devices. This technology comes as standard in today’s smartphones. To make a contactless payment, customers place their smartphones close to an NFC reader in a store. This will prompt the customer’s digital wallet to ask them to confirm their payment.

The collection of spending data is a concern for 61% of respondents

Digital wallets can be convenient for consumers but also for businesses. Companies can collect valuable customer data, such as how often consumers shop, where they shop, what they buy, and how much they spend. This wealth of consumer spending data can be used to improve marketing messages and customer service and to study customer behaviour.

However, 61% of consumers are somewhat or extremely concerned about companies collecting all their spending data. Such is their concern that 42% of these same respondents try to limit the use of their digital wallets for this reason. 

Only 34% of consumers feel the government is doing enough to regulate the use of digital wallet data

We have seen that consumer spending data is a concern for many digital wallet users. We wanted to know if these consumers considered that the government was doing enough to regulate the storage and use of information collected from digital wallets. 

Despite the introduction of the current General Data Protection Regulation (GDPR), only a third of respondents believed the government was doing enough when it came to regulating digital wallet use. A further 42% were on the fence, while 24% felt the UK government should do more. 

Less than half believe financial companies who offer digital payment methods do enough to protect digital payment data

It isn’t just the government that needs to ensure the protection of digital payment data. Although 43% of respondents believe financial companies are doing enough to protect digital payment information, 36% are unsure, while 21% feel these companies should be doing more. 

How can companies build trust and protect digital payment data?

Customers may be wary of the use and protection of their digital payment data. SMEs incorporating digital payment methods or integrating third-party digital payment services should take steps to build trust and safeguard any personal data.

Data protection and compliance technology can help identify sensitive data and ensure that it's handled securely and in compliance with GDPR. Privacy policies should be clear and transparent and mention:

  • How data is stored and accessed
  • The purpose of collecting this information
  • What security measures are used to keep data safe
  • Details of any data transfers
  • Use of cookies
  • Affiliated websites, third parties, or organisations that may have access to this information

Digital wallet users feel more in control of their identity

Digital wallets have the potential to set new standards for privacy and control. These wallets offer the possibility to support and deliver different credentials in a single location. However, they should be secure so that if, for example, a company requires access to a digital driver’s licence, it doesn’t have access to the user’s digital health card in the same wallet. 

Digital credentials should remain with the user at all times. But do digital wallet users feel in control of their identity when using these services?

How much control do consumers have over their digital wallet identity?

According to our survey, 67% of respondents felt that digital wallets made them feel more in control of their identity because it was easier to demonstrate their credentials without having to go to check-in desks or multiple locations to share their identity data. 

Are consumers who pay with digital wallets ready to go cashless?

Once consumers have begun using digital wallets instead of cash or cards, how willing are they to go cashless or cardless? Our survey showed that a combined 61% of consumers who use digital wallets as debit or credit cards ‘somewhat’ or ‘strongly’ agree they are willing to stop using cash and start using digital-only payments. 

Are digital wallet users ready for a cashless economy?

Furthermore, it isn’t only cash that they are willing to stop using. 62% of respondents were also interested in having a society-wide cardless system. This can indicate the potential growth and adoption of digital wallets as a primary payment method.

Digital wallet users have not stopped using cash

Despite showing an interest in going cashless and even cardless, 65% of digital wallet users who tend to use these apps as debit or credit cards say they still carry cash with them today. There can be several reasons for this, as we already saw in the first part of our survey. For example, around a quarter of current digital wallet users stated that these wallets weren’t accepted everywhere.

Consumers were also worried that their smartphones could run out of battery and leave them with no money. These stated disadvantages could contribute to some digital wallet users still carrying cash. 

Digital wallets should protect data privacy and comply with GDPR

Digital wallet use is on the rise. The majority of consumers who have tapped into the potential of these wallets and used them to carry out financial transactions are generally satisfied with their performance. Eventually, many of these digital wallet users are willing to envision a cashless future or cardless systems. However, there is still a way to go before this is realised, and cash use is still prominent today. 

Privacy issues may be a concern for consumers who are hesitant about using these wallets. However, frequent digital wallet users are generally satisfied with how this technology helps them safeguard their identity. For those consumers who may be hesitant about the protection of their identity, the emergence of decentralised digital wallets, which use blockchain technology and encryption so that only the user can access their own data, may help preserve privacy and improve data protection.

However, when it comes to protecting their spending data, these consumers still feel that governments and financial institutions should do more to guard and regulate the use of this data. More transparency and regulatory compliance can help consumers feel more at ease when it comes to how their spending data is used.

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For Part 1 of the Digital Wallets Survey, Capterra interviewed 1,004 consumers in September 2022. The surveyed candidates had to fulfil the following criteria: 

  • UK resident
  • Between the ages of 18 and 75
  • Owns a smartphone
  • Understands the definition of a digital wallet

For Part 2 of the Digital Wallets Survey, Capterra only interviewed the 418 survey respondents who use digital wallets as a credit/debit card to pay for goods and services.