Success in e-commerce is all about eliminating barriers between the customer and the sale. Even the slightest friction at the point of purchase could see you lose sales. The easier you make it for the customer to pay securely and conveniently, the lower your bounce rates and risk of shopping cart abandonment.
An E-Wallet, also known as a digital wallet, can go a long way towards facilitating frictionless purchases. It is a combination of software and data that allows consumers to make quick and easy purchases using something called near-field communications technology. This is where two smart devices communicate with one another when in close proximity (e.g. Apple Pay and Google Pay).
Here we’ll look at how they work and how they can benefit your customers and your business.
How does an E-Wallet work?
E-Wallets work just like a physical wallet, containing not only credit card and debit card data, but potentially loyalty card data, digital coupons, airline boarding passes and even driving licence information. An E-Wallet can make secure payments both online and in a physical store without the need to memorise individual passwords.
E-Wallets are often used in conjunction with mobile phone payment systems to facilitate fast, easy and secure e-commerce and in-store payments through smartphones.
Different types of E-Wallets
E-Wallets are divided into two types of digital wallets: hot wallets and cold wallets. They work on the same principle, except that hot wallets are connected to the internet while cold wallets are not. Hot wallets are most often used to make fast and easy payments. A cold wallet, on the other hand, is generally used for storing digital or cryptocurrency. A cold wallet is a physical device while a hot wallet takes the form of a software platform. Most people who use E-Wallets use both hot and cold variants. While hot E-Wallets store customer data in secure online servers, some prefer the additional security afforded by a physical cold wallet.
Some of the most popular hot E-Wallet providers include:
Google Pay (an amalgam of Android Pay and Googl E-Wallet)
Cold E-Wallet providers include Trezor, Ledger, Keepkey and CoolWallet.
How does using an E-Wallet benefit your customers?
An E-Wallet benefits customers because it facilitates a transaction that gives them everything they want – speed, convenience and security. It eliminates the need to carry a physical wallet with them when they go out, and means they don’t have to dig out their debit card when they want to make an online purchase. They don’t need to remember passwords or credit card “long numbers”. As long as they have their smartphones close to hand, customers can get quick, easy and secure access to the products or services they want.
How does using an E-Wallet benefit your business?
The benefits of an E-Wallet for customers also benefit your business. By eliminating friction at the point of sale, they can reduce cart abandonment and facilitate a positive customer experience. This can only bode well for their impression of your brand. This applies as much to in-store interactions as it does for online purchases. The quicker and easier it is for customers to pay, the faster queues will move and the more pleasant the customer experience.
E-Wallets are also beneficial to businesses that collect consumer data, helping them to better understand their customers’ habits and market to them more effectively.
We can help
If you’re interested in finding out more about E-Wallets and facilitating frictionless digital payments, then get in touch with our financial experts. Discover how GoCardless can help you with ad hoc payments or recurring payments.