The State of Digital Wallets Series

by | May 19, 2022 | Blockchain, Digital Wallet, State of Digital Wallets Series

The Digital Wallet market is quickly evolving, with many providers and increasing consumer adoption. They are critical to the evolving digital landscape, yet Digital Wallets can still be poorly understood. In 2018 we published a report, The Current and Future State of Digital Wallets, providing an overview of the state of the digital wallet market and a forecast for its future growth at the time. The State of Digital Wallets Series is revisiting the report that defined what a Digital Wallet is, clarified the Digital Wallet industry and ecosystem, and provided guidance for organizations to move forward as the ecosystem continues to form.

In 2022, the digital wallet market will be more mature as providers strive to offer users a variety of features. From Apple Pay to Google Pay, organizations are giving us the ability to make payments online, in person and more. As noted in 2018, this report will need to be revised or replaced as our understanding of digital wallets evolves quickly. And indeed, it has.

The Baseline

On the fourth anniversary of our original report, let’s revisit the current state of digital wallets. More importantly, let’s lay out a vision for where we think they need to go in the future. We hope you will join us in this effort to shape the future of digital wallets.

Whether you’re just starting to learn about digital wallets or have read it in the past, The Current and Future State of Digital Wallets is a valuable resource. As our real-world continues to mesh with our digital world, the state of the ecosystem is an area we should be keeping a close eye on. After all, these wallets will be the holders of our identities and much more. 

We always seek feedback and input from our peers and the public. In other words, if you have any questions or comments about Digital Wallets or the report, please don’t hesitate to contact us. We value your feedback and will respond as soon as possible. 

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The State of Digital Wallets Series

1. Introduction – State of Digital Wallets. 

The report provides an overview of digital wallets and their potential applications. It also highlights some of the challenges associated with their development and deployment. Finally, it offers suggestions for how organizations can successfully adopt and utilize digital wallets.

2. What is a Digital Wallet? 

The general idea is pretty simple – it’s a Thing we put our Stuff in. Nonetheless, the hard part comes when we have to identify what is that Thing, what Stuff do we put into it? And what does it mean to put Stuff in it? What about getting our Stuff out? or Updating our Stuff?

3. Digital Wallet – Deeper Detail. 

We’re beginning to sense that our Digital wallets will become more important than our physical wallets. Think about what you would rather leave at home when you go out – your phone or your physical wallet? Many of us can make it without a wallet, but we feel naked without our phones.

4. Detailed Capabilities of Wallets & Agents. 

Mainstream Digital Wallets like Apple Pay and Google Pay allow simple information to be “carried” inside them. Everything from credit and debit cards and plane tickets to loyalty reward cards and receipts. This section briefly describes some of the capabilities that Digital Wallets are beginning to (or will) support.

5. Guiding Principles for Digital Wallets. 

A few high-level guiding principles should be kept front of mind for those designing, building, and using Digital Wallets to create user experiences. To illustrate, this section looks at ​Consent-Driven, ​Privacy by Design, Security by Design, and ​Portable and Open by Default.

6. “Stuff” In A Digital Wallet. 

It’s not just a place to store your credit and debit cards. This section provides a brief overview of some current Digital Wallets’ capabilities or some they will soon have.

7. Enterprise Wallet. 

Enterprises are more likely to have multiple agents operating in a single digital wallet. Enterprise-grade digital wallets have unique requirements to manage an organization’s needs. Some requirements may apply to people (e.g. Scale); they become more critical when working at an enterprise level.

8. Agents – Deeper Detail. 

As the adoption of digital wallets increases, we can deploy agents to handle mundane tasks, protect us from errors, and improve our lives. This section provides a deeper view of the potential benefits of using agents.

9. State of Tech / Art of The Possible. 

We examine the current areas where Digital Wallets are working and discuss, at a high level, how well they are performing. Nonetheless, there are still fundamental areas in which the Digital Wallet space will face difficulties. In short, we touch on the user experience, driving adoption and loss and theft protection as starting points to consider.

10. Further Research and Effort. 

There is a need for extensive research, development and educational initiatives to foster growth in the digital wallet ecosystem. This includes exploring concepts such as trust registries, credential lifecycles, certification and exclusions.

11. Standards. 

The Digital Wallet ecosystem is still in an early stage of development and lacks formal standards in most areas, including self-sovereign identity stack and Wallet portability. While informal standards may exist in some areas, they are not always followed.

12. The User Experience Challenge. 

Digital Wallets have been, for the most part, a miserable experience. Microsoft Passport was the first attempt over twenty years ago, and Apple and Google Pay haven’t been much better. The success of Digital Wallets shouldn’t feel like we are using a Digital Wallet; they should feel more like using a credit card or enhanced mobile payments.

13. Business and Markets. 

Different providers will offer various components for digital wallets, such as operating systems, hardware platforms, and software. The market for these wallets will shift from standalone applications to a more plug-and-play environment, where users can mix and match different components. This article discusses how the market will develop and offers some early strategies for businesses to leverage this evolving technology.

14. Early Business Approaches. 

Digital Wallets should focus on single-purpose use cases. Further, a broad Wallet strategy is not advised at the early stages. In order to progress, we should consider Single-Purpose Use Cases, Backup & Recovery, and Trust Hubs when building a Digital Wallet strategy.

15. Influence Things.

Initially, those who are innovators and early adopters will benefit by starting early. In order to ensure the success of the ecosystem and encourage investment in this space, three key activities must be undertaken: allocating time, resources, and funds. We must evaluate the points of control and influence in the Digital Wallet space. Finally, we should ask ourselves specific questions as we examine each one.

16. The Upcoming Wallet Wars. 

The Browser Wars have seen a great deal of investment and changes. As a result, most browsers work in similar ways and are interchangeable. As browsers add Digital Wallet capabilities, the incompatibilities and feature mismatches will increase. Likewise, the Digital Wallet realm will go through a similar process, with many players coming in and vanishing.