LONDON–Consumers are increasingly using mobile wallets such as Apple Pay and Google Pay to make payments, and the reasons won’t come as much of a surprise to anyone, new research has found—and perhaps neither will the threat to traditional financial services providers.
According to an analysis by Chargebacks911, a chargeback technology platform, the recently released Cardholder Dispute Index, which is supported by data from Pymnts Intelligence, found the reason for using the mobile wallets is pretty obvious: “We all have mobile devices with us at all times and plastic credit and debit cards are easily left at home, lost or damaged, so it makes sense to make phones the center of your financial life, especially when they allow for security measures that wouldn’t be possible with plastic cards.”
Overall, it is estimated that half of the world’s population will use mobile wallets by 2025, the report notes.
Security Issues
“However, the findings also report there are security problems with mobile wallets that aren’t present in other forms of payment, and the pressing issue of chargebacks, which in some ways are easier through digital platforms than they are through physical cards,” Chargebacks911 stated. “It is also the case that because they are linked to payment cards, they are less an alternative payment method than simply a different way in which to access the same accounts as plastic credit and debit cards.”
Threats to Traditional Providers
Already entrenched in many parts of the world, the analysis further suggested that so-called “super apps,” such as China’s WeChat and India’s PayTM, are providing users access to a suite of services that in other parts of the world are covered by multiple apps.
‘Almost Mandatory’
“Using these apps is almost mandatory for billions of people, and it may be the case that other countries develop super-apps of their own,” Chargebacks911 said. “What does this mean in the real world? Firstly, it means that high-street banks may be due to decline – there is little use for them when people are paying with their phones and administering their accounts through apps. Secondly, it may mean an increase in chargebacks and APP fraud.”