Apple has come out on top with regards to data privacy, while other major players like Cash App and Venmo fall short on transparency and user controls, research from Consumer Reports (CR) says.
Published on April 24, CR’s report notes digital wallets have quickly become an essential part of the day-to-day lives of the majority of consumers. The report reviews wallets from six market participants: Google, Apple, Samsung, Cash App, PayPal and Venmo.
According to a February 2024 survey by CR, 76% of Americans use one or more digital wallets, with 29% of Americans now using a digital wallet at least weekly.
Due to the increasing adoption rates of digital wallets and high value of the sector, companies are vying for a slice of the market.
How do wallet providers compare?
CR identified 14 key findings in its review, with data usage featuring prominently in two of them. While CR acknowledges that digital wallets have legitimate reasons to collect, use and share sensitive information, it asserts providers are falling short of acceptable standards regarding the secondary use of this data.
Apple has been among the headlines recently when it comes to data protection, driven by a legal battle between the Big Tech company and the UK government. The government has requested access to Apple customers’ most securely encrypted data, which Apple has fought back against.
In CR’s report, Apple was said to have “stood out” in its privacy practices, with the majority of data collection, usage and sharing appearing to be necessary.
However, the provider uses this data for marketing purposes, a practice also employed by Google. The other four wallets – Cash App, PayPal, Samsung, and Venmo – not only use the data for marketing but go a step further by sharing it with third parties.
CR highlighted PayPal as the only wallet to provide an easy, in-app method for users to exercise data rights. Apple and Google do offer centralised tools, but the report deems them ‘uneasy to find’. Cashapp users must use a web browser to download a copy of their data, find a support article and then start a chat to request data deletion.
Wallets used as gateways to broader services
In addition to digital wallets being used to collect useful consumer data, the report found these products are also used to onboard customers. CR stated that while ‘none of the apps require users to sign up for additional services when onboarding to the digital wallet or P2P service, most of the apps do advertise those additional services within the app experience’.
Google was the only company found not to partake in this strategy. Apple pushed advertising for Apple Card, which took up two-thirds of the page. Two out of five tabs on Cash App were ads for services/discounts.
Whereas, PayPal advertised PayPal debit cards, Samsung promoted cash back features, and Venmo’s main landing page contained an ad for Venmo credit card.
Peter Theunis, SVP of BPC, also spoke about the onboarding potential of digital wallets in a recent interview with Payment Expert at the Pay360 conference.
“There is a lot of digital wallet implementation, because wallets are often the best way to onboard people,” he said.
“There are two segments in the Middle East, which are countries like Saudi Arabia that are very mature, and more emerging markets like Egypt, etc. But you see that wallets, for most companies, are the instrument to onboard.”
Despite calling out several areas in need of improvement, CR acknowledged digital wallets still offer a “generally safe and convenient way to conduct transactions.”
The report praised the apps for using technology and design to streamline payments but emphasised that the same tools should be harnessed to better inform users about privacy, highlight potential risks, and empower them to manage their financial lives more effectively.
“Consumer Reports will continue engaging with industry and advocating for product design that centers on consumer protection and well-being,” the organisation said.
