Maslow’s Hierarchy of Needs is the theory that people are motivated to act based on different levels – basic needs, psychological needs and self-fulfillment needs.

Similarly, we could also identify a hierarchy of needs for mobile wallet adoption – from the basic survival needs to providing measurable value for banks and customers.

As banks familiarize themselves with these four levels of the mobile wallet hierarchy of needs, it may not bring them to Maslow’s self-actualization, but it will help them understand the factors behind the long-predicted growth in mobile wallet adoption.

Larger retailers such as Starbucks have been able to lure merchants to mobile payments, but most small merchants still do not have a mobile payments program.
Bloomberg News

Wallet Availability. 72% of the U.S. population owns a smartphone, which is a number that has consistently grown over the past decade. In addition, during the past year alone, the market has welcomed dozens of new mobile wallets. Because of this, most U.S. residents have moved beyond the most basic need in the hierarchy, which is wallet availability.

Merchant Acceptance. Big players such as Starbucks are experiencing great success with mobile pay. As reported by Fortune, every fourth transaction for the coffeehouse mogul originates from a mobile device, but the largest opportunity for mobile wallet growth is with small businesses. Currently, only 34% of small businesses accepts mobile wallet payments. While that represents an increase from last year, slow and steady may not win the mobile wallet race. Consistently accessing mobile pay at our favorite stores, whether big or small, is a significant factor in the customer experience.

Security. While mobile wallet adoption is high among younger users, security is a concern even for the most connected generation. A recent study by Oxford Economics — commissioned by NTT DATA and Ingenico revealed that consumers are eager to use mobile payments, but safety concerns such as identity theft or loss of funds can hinder adoption. This missing link could be solved by banks educating consumers about safe transactions. Just like credit and debit cards have evolving layers of security, consumers need to learn about the protection in place for mobile wallets.

Value. Finally, the critical hierarchy level to consumer adoption is that a mobile wallet should add value to the shopping experience that would not otherwise be present. The study by Oxford Economics, NTT DATA and Ingenico also revealed that 60 percent of global consumers agree that mobile money enhances their purchase experience.

For example, some merchant’s mobile wallets offer advanced ordering, free delivery and first access to sales. In addition, general purpose mobile wallets add value by leveraging data, such as when a bank leverages information about a consumer’s accounts, balances and transaction history to make a recommendation that optimizes their next transaction.

Peter Olynick

Peter Olynick

Peter Olynick is the Senior Practice Lead, Retail Banking for NTT DATA Consulting, Inc.