Today’s apps make it easier than ever to send and receive e-commerce payments with a single tap or swipe. Digital wallets like Apple Pay and others have already been around for some time within Australia. So, what is a digital wallet and how does it work? Find out below our guide to the different types of digital wallets.
Digital wallet explained
Also called an e-wallet, a digital wallet is simply an app that stores payment information on a smart device or online. Rather than carrying a physical wallet loaded up with credit and debit cards, customers have all their payment details loaded onto their smartphones. Digital wallets can be used to make contactless payments as well as for online shopping. With online checkout, users can simply sign in with a username and password rather than filling out a lengthy payment form for each purchase.
The digital wallet definition goes beyond debit and credit card payments. They can be used to store digital coupons, loyalty cards, and transport cards. Essentially, everything you’d include in a physical wallet is stored in one handy digital space instead. Because the details are encrypted, it’s kept secure.
How do digital wallets work?
Now that we’ve covered the digital wallet definition, you might still be wondering how this technology works. These electronic apps use near field communication (NFC) technology, which enables different radio frequencies to communicate with one another for contactless payments.
With the application of encryption and digital certificates, transactions are authenticated, and financial and personal details kept safe. A digital wallet can be used for multiple functions, including:
Bill paying online
Storing personal details
Making person-to-person payments
Earning reward points
Different types of digital wallets in Australia
So, what are your options when it comes to digital wallets? Australians have access to all the major wallets from Apple, Google, and Samsung, as well as a few more localised services.
1. Apple Pay
If your customers use an iPhone, iPad, Apple watch or Mac computer, Apple Pay is a useful option for storing various cards in one space. When signing up, they’ll be able to use an Apple device to pay for purchases by holding it near any card reader. It’s also useful for online purchases, without any need to create separate accounts.
2. Samsung Pay
Samsung Pay is very similar to Apple Pay, with the main difference being that it works for Samsung devices. As with other digital wallets, users link their cards to the app which can then be used to make purchases in person or online.
3. Google Pay
Google users might wish to sign up for the Google Pay digital wallet, which is compatible with all Android devices. Like others on this list, it uses NFC technology for easy contactless payments using your mobile device or smartwatch. Customers can also log in to their Google accounts to make streamlined payments and purchases online.
4. Click to Pay
Many individual credit card companies have tried their hand at some version of digital wallets over the years. MasterCard once offered PayPass, while Visa offered V.me followed by Visa Checkout. These have now been phased out in favor of a joint effort called Click to Pay, which combines the Visa, MasterCard, Discover, and American Express networks in a single online payment service. While this doesn’t function as a mobile wallet, users can sign up and store multiple card details in a single platform for easier e-commerce payments.
5. Beem It
Unique to Australia, Beem It is a peer-to-peer app created by National Australia Bank, Commonwealth Bank, and Westpac in 2018. This payments app has been purchased by the debit network Eftpos with the aim of transforming it into an all-in-one digital wallet to manage banking transactions and buy now, pay later financing.
The pros and cons of digital wallets
Are digital wallets right for you? Here are a few pros and cons to consider.
Advantages of digital wallets:
They keep all financial details in one space
There have comprehensive built-in security features
They prevent physical cards and cash from being stolen
They are low or no-fee in comparison to bank transfers and credit cards
Disadvantages of digital wallets:
Not every market will accept every type of digital wallet
Some are specific to certain devices
They involve new technology
Be sure to compare features carefully before choosing a digital payment option. For e-commerce businesses, it’s well worth accepting digital wallet payments. They not only reduce transaction fees but can also keep your customer data safe.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.