Understanding

the E-Wallet User

A Market Research Report
2001 MasterCard International Incorporated. All rights reserved. The information contained herein is
proprietary and confidential to MasterCard International and its members and may not be used for any
other purpose. This material may not be copied, distributed, published, or disclosed, in whole or in part,
in any medium, without the prior written permission of MasterCard International.
Research Highlights
Shopping cart abandonment continues to be a widespread
problem for online retailers. One major reason is the length
and difficulty of merchant checkout form completion.
Close to 20 percent of online shoppers have already installed
an e-wallet, primarily to fill out online forms.
94 percent of users surveyed had positive e-wallet experiences
and most intend to continue using their e-wallet.
Financial institutions or credit card companies are most
preferred as e-wallet providers.
Online shoppers using issuer-supplied e-wallets report
increased online spending and greater loyalty to the cards.
Users are interested in having a variety of features in their
e-wallet, including financial functions.
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Estimated Quarterly U.S. Retail
E-Commerce Sales
(Billions of Dollars, U.S.)
(Data not adjusted for seasonal, holiday, or trading day differences
and does not include travel, financial goods, or tickets)
Source: U.S. Department of Commerce
Q4 1999 Q1 2000 Q2 2000 Q3 2000 Q4 2000
$5.198 $5.240
$6.393
$8.686
$5.526
10
8
6
4
2
0
1. Retail E-Commerce Sales in Fourth Quarter Were $8.7 Billion, Up 67.1 Percent from Fourth Quarter 1999, Census Bureau Reports, U.S. Department
of Commerce News, February 16, 2001.
2. The Payments Agents: The Next Generation of E-Wallets, IDC, December 2000.
3. E-Commerce Payment and Shopping Tools: U.S. Tracking Study, Wave 2, MasterCard International, March 2001.
1
Research Methodology
This research took place fourth quarter 2000 and consisted of 450 random online "interviews" with
U.S. residents who are members of Greenfield Onlines proprietary panel. All respondents had an
electronic wallet installed or activated in the previous six months; made an online purchase during
that same time period; and owned a multi-purpose credit, charge, and/or debit card.
Some of the findings included in this publication were taken from other MasterCard proprietary
studies and are noted as such.
Executive Summary
In recent years, Internet commerce has grown steadily, with e-retail sales accounting for an increasing
percentage of total retail sales. Yet, there is still huge potential for additional growth. U.S. retail
e-commerce sales for fourth quarter 2000 reached $8.69 billion (an increase of nearly 36 percent
over the previous quarter).
1
By 2004, U.S. consumer spending online will reach $163.2 billion.
2
A variety of tools has been developed to enhance the online shopping consumer experience with the
ultimate goal of increasing online purchasing. One tool is the digital wallet, or "e-wallet." The earliest
e-wallets sought to streamline the shopping experience by helping consumers fill out online forms.
Over the relatively short period that e-wallets have been available to consumers, their capabilities
have evolved to offer more functionality. Today, close to 20 percent of online shoppers have already
installed an e-wallet.
3
How do online shoppers feel about e-wallets? How do e-wallets impact online spending behavior?
To answer these and other fundamental questions, MasterCard

launched the Electronic Wallet Usage

Study in late 2000 to achieve the following:
Assess the e-wallet usage experience
Gain insight into e-wallet users attitudes toward different e-wallet providers
Understand the functions that make e-wallets desirable
Shopping Cart
Abandonment
Time-consuming checkout procedures
add to shopping cart abandonment.
Various studies have reported that a
majority of online shoppers load their
shopping carts only to abandon them
before checking out. Previous
MasterCard research has shown that
80 percent of online shoppers had
abandoned shopping carts at least once
in the previous three months.
4
One year
later, online shoppers still experience the
same problems with the checkout process.
Shopping cart
abandonment
continues to be
a problem for
online retailers,
with fewer than
two percent of
visits to these
sites resulting in
purchases.
5
Major Reasons for Shopping
Cart Abandonment
55%
45%
44%
40%
21%
20%
14 %
Higher than expected
shipping charges
Just window
shopping/comparing prices
Website was not working properly
Took too long/required too
many fields
Website requested too
much personal information
Was unable to use a coupon or
discount code on site
Website was not secure for
online shopping
4. U.S. Consumer Internet Use and E-Shopping Report, MasterCard International, February 2000.
5. Clinching The Holiday E-Sale, Rewick, Jennifer, The Wall Street Journal, October 9, 2000.
2
3
Awareness and Use
of E-Wallets
The first step toward stronger e-wallet
usage is increasing consumer awareness
and understanding of the technology.
The next step is to
ensure a positive
consumer experience
to encourage continued
use of e-wallets after
initial activation.
Ninety-four percent of
users surveyed had
positive e-wallet
experiences, and most
of those intend to
continue use in the
future.
As a result of growing
awareness and positive
consumer experiences
with e-wallets, the
overall utilization rate
has risen from 14 percent to
17 percent in the six months
from Spring 2000 to Fall 2000.
6
Awareness of E-Wallets
Spring 2000 Fall 2000
43%
50%
45%
52%
24%
32%
Total Online Buyers Online Non-Buyers
60%
50%
40%
30%
20%
10%
0%
Source: "E-Commerce Payment and Shopping Tools: U.S. Tracking Study, Wave 2," MasterCard International, March 2001
Use of E-Wallet vs. Merchant Accounts
(Percent Ever Used)
Spring 2000 Fall 2000
Source: "E-Commerce Payment and Shopping Tools: U.S. Tracking Study, Wave 2," MasterCard International, March 2001
14%
17%
23%
26%
E-Wallets Merchant Account
30%
25%
20%
15%
10%
0%
5%
6. E-Commerce Payment and Shopping Tools: U.S. Tracking Study, Wave 2, MasterCard International, March 2001.
Online shoppers are
happy with their
e-wallet experiences
and intend to
continue use.
The vast majority of
e-wallet users indicate
that this tool has
enhanced online
shopping. Nearly
nine-in-ten are
somewhat likely to
use an e-wallet in
the near future, with
six-in-ten having a high
likelihood of doing so.
Satisfaction with E-Wallets
and Intended Future Use
Positive Experiences with Use of E-Wallets
Positive Experiences Using E-Wallets (net) 94%
Base: Experienced Electronic Wallet Users (n = 415)
81%
69%
60%
58%
53%
42%
31%
26%
Saved time filling out forms
Successfully filled out forms
E-Wallet helped fill out
forms more accurately
Password retrieval function
worked when needed
Felt credit card information was
securely stored by e-wallet
through e-wallet
Used coupon or discount offer

Was able to store multiple credit card
numbers and shipping addresses
E-Wallet automatically popped up
when blank forms appeared
4
Likelihood of Using an E-Wallet
in the Next Three Months
Extremely/Very/Somewhat Likely 84%
Extremely/Very Likely 62%
Extremely Likely 39%
Very Likely 23%
Somewhat Likely 22%
Not Very Likely 11%
Not At All Likely 5%
Base: Experienced Electronic Wallet Users (n = 415)
5
Preferences for Type of
E-Wallet Providers
Users prefer to have financial
institutions provide their
e-wallets.
Most wallet users want a
traditional credit card company
or financial institution to
provide their e-wallet because
of the perceived security and
access to financial and banking
functions. Moreover, about
50 percent of consumers who
use the two most popular
Internet e-wallets would
prefer a wallet hosted by a
credit card company.
Type of Company Preferred to
Host/Support an E-Wallet
Traditional Credit Card Company/Financial Institution
Internet Service Provider (ISP)
36%
11%
53%
This represents
a substantial
card issuer
opportunity
Internet Company
Base: Experienced Electronic Wallet Users (n = 415)
Characteristics Associated with Different
Types of E-Wallet Providers
Base: Experienced Electronic Wallet Users (n = 415)
67% 24% 9%
Security
61% 28% 11%
Provides access to other financial
banking functions
60% 28% 13%
Privacy
53% 36% 11%
Extent to which is accepted by
various merchants
41% 46% 13%
Variety of features or services
37% 51% 13%
Works like it is supposed to work
26% 58% 16%
Provides access to shopping
offers/discounts
Traditional Credit Card
Company or
Financial Institution
Internet Company
Internet Service
Provider
6
Enhanced Loyalty
Successful experiences with e-wallets
strengthen the issuer/cardholder
relationship and are likely to result
in increased online spending and
card usage.
One-in-four consumers
now using e-wallets
provided by their
credit card issuers
indicate that their
online spending and
associated card usage
has increased as a
result of having an
issuers e-wallet.
And, a substantial
number of those
who have not yet
been offered an
e-wallet anticipate
adding to their
online spending
with that issuers
card, if an e-wallet
were offered to them.
Most e-wallet users can
accurately identify specific
brands of e-wallets, indicating
that they are cognizant of
the existing offerings and
can differentiate among them.
With e-wallet users indicating
positive experiences,
issuer-provided e-wallets
promise to strengthen and
grow the relationship with
this segment.
Spending Changes with
Use of Card Issuer's E-Wallet
This data is directional given small base size.
Percent that said
online spending
with the card
associated with
the issuer's
e-wallet has
increased
Percent that said
online dollar volume
of spending has
increased overall
23%
23%
Anticipated Spending Increases
28%
Base: Not Yet Offered Card Issuer E-Wallet (n=343)
Percent that
anticipate increased
online spending
on the card account
associated with
the issuer's e-wallet
7
Features Desired in E-Wallets
Strong interest exists among current e-wallet users for additional functionality.
While "basic" wallet functions, like form-filling and password storage, are still the
foundation of e-wallets, a substantial number of users show interest in having
e-wallets perform additional functions. Such functions might include generating a
temporary account number linked to their credit card account for online purchases
("pseudo-account numbers"); providing shopping offers, discounts, and coupons; and
acting as a repository for their online purchasing history.
Percent Rating Extremely/Very Important
Fills out online merchant forms automatically 79%
Inputs merchant account password instantly at merchant site 64%
Stores merchant account passwords for merchant sites 64%
Stores passwords for sites other than just merchant sites 63%
Stores payment information for a credit card 58%
Stores information for multiple credit cards 50%
Stores multiple shipping addresses 45%
Generates a temporary account number linked to your credit
card account for online purchases 43%
Provides shopping offers, discounts, and coupons 42%
Provides a centralized history of online purchases 42%
Provides a comparison shopping tool 35%
Provides a merchant directory for online stores on the
e-wallets website 29%
Offers a person-to-person online payment service 29%
Provides easy access to major search engines, the stock
market, and shopping sites all in one place 25%
Gives access to other online banking functions 22%
Is automatically activated when a smart card is inserted into
a card reader 20%
Provides a special e-mail address for merchant mail 19%
Base: Experienced Electronic Wallet Users (n = 415)
8
Financial Functions Desired in E-Wallets
Online banking and other financial activities are logical extensions of existing e-wallet functions.
Users already have experience with online banking and other financial activities, which an e-wallet
can help simplify. Furthermore, existing e-wallet users report an interest in using their e-wallets for
these activities.
Online Financial Activities with Which
E-Wallet Users Have Experience
Base: Experienced Electronic Wallet Users (n = 415)
89%
55%
48%
35%
23%
Purchased merchandise
or services online
Applied for a credit card
or charge card
Paid bills
Participated in an
online auction
Transferred balances
Likelihood of Using E-Wallet to Perform
Financial Functions in the Future
Base: Experienced Electronic Wallet Users (n = 415)
58%
54%
35%
34%
29%
Check credit or charge
card statements
Check bank balances
Pay bills
Transfer funds from
one account to another
Send money to another
person
Summary
Awareness of e-wallets has grown over the last 12 months among both
online buyers and non-buyers. The vast majority of current e-wallet users
have been pleased with their e-wallets ability to save them time and
simplify the online shopping experience by automatically remembering
passwords, billing information, and shipping addresses. In addition, a
sizeable proportion of current e-wallet users report increased online
spending and a greater tendency to use the card associated with their
issuers e-wallet.
Positive experiences with e-wallets, coupled with the fact that a majority
of current e-wallet users prefer a wallet issued by a traditional credit
card company or financial institution, represent a substantial opportunity
for MasterCard card issuers. Our research indicates that cardholders
would use their "trusted" e-wallet not only to shop online more often,
but also to engage in other financial activities. This would serve not only
to enhance the cardholder-issuer relationship, but also to reinforce the
issuers brand as well.
Clearly, users understand that e-wallets are multi-dimensional and can act
as platforms for related financial functions. In addition, strong interest was
shown in offering some of the newer financial applications via an e-wallet
including access to online banking applications and person-to-person
payments. Interest was also demonstrated in substitute account numbers
and smart card activation.
Working with our member financial institutions, MasterCard is uniquely
positioned to capitalize on emerging technologies by offering cardholders
ubiquitous access to their payment accounts. Utilizing new technologies,
such as electronic wallets, smart cards, and wireless devices, MasterCard
members will be able to deliver payment services at a point-of-interaction
that is closest and most convenient to their customers.
MasterCards strategic alliances in the e-wallet arena will provide members
with greater choices when developing their e-wallet strategy, not only for
online activities but also for mobile commerce, set-top boxes, and other
emerging transaction channels. A wide variety of solutions is available,
and each provides a unique set of issuer and consumer benefits. To learn
more about MasterCards e-wallet strategy and programs, contact your
Member Relations Representative today.
EC501-RES
MasterCard International Incorporated
2001