Last editedMar 20223 min read
While services like Apple Pay haven’t completely replaced the credit card, they have become strong competitors. In fact, the 2021 Global Payments Report found that digital wallet payments are expected to account for 40.5% of North American ecommerce payments by 2024. If you’re on the fence about whether to accept this type of payment, here are a few benefits of digital wallets to consider.
What is a digital wallet?
The term digital wallet is a catch-all phrase that covers both mobile wallets and other electronic payments. Also called an e-wallet, digital wallets serve as electronic versions of your usual payment cards. They’re usually stored on a mobile device like a smartphone or tablet, but some e-wallets are stored on desktop and laptop computers as well.
Digital wallets are linked to your bank account, debit cards, and/or credit cards. Users can access multiple forms of payment from a single app, just as you would store multiple credit cards in a physical wallet. Some store additional information like loyalty cards, travel cards, boarding passes, and even room keys for hotels.
While the term “mobile wallet” and “digital wallet” are often used interchangeably, mobile wallets are a subset of digital wallets that focus purely on mobile payments. This could include tap-and-go payments using NFC (near field communication) wireless technology, mobile payment processors like Square, or mobile payment platforms like PayPal.
Examples of popular digital wallets include:
PayPal One Touch
Benefits of digital wallets for the consumer
Gone are the days when you must stuff a wallet into your pocket or handbag. One of the main benefits of digital wallets for consumers is the fact that everything is stored on your phone. This creates less clutter and reduces your chances of losing important cards. Services like Apple Wallet not only store credit and debit cards, but can also handle additional passes like concert tickets, travel cards, and coupons all in one central location.
In addition to the convenience factor, digital wallets offer heightened security. You don’t run the risk of leaving a credit card behind. All important financial details are fully encrypted and only accessed with your personal password, PIN, or biometric details.
Services like Venmo and Google Pay offer peer-to-peer transfer payments, which makes it easier to split the bill with a group of friends or send monetary gifts to friends and family. Some e-wallets even let you track your expenses as part of the app, for better budgeting.
Benefits of digital wallets for the business
It’s clear that digital wallets are convenient and secure for your customers, but what are the benefits for your business?
They improve your customer experience by streamlining the checkout process. Customers can get frustrated if they try to make a purchase, only to be faced with a lengthy checkout page to fill out. With fewer click-throughs and forms, customers are less likely to abandon the shopping cart. This in turn can drive up conversion rates – a win-win for your business and customers alike.
They keep sensitive financial details secure. Protecting cardholder details is vital for your business, as any security breach can create a serious hit to your reputation. When you implement digital wallets into your website, the wallet provider helps provide an added layer of security with the use of biometrics like fingerprint and face recognition technology.
You can offer alternative payment options to your customers. Not all customers like using credit cards, and with digital wallets you can accept alternative payments like Bitcoin or direct PayPal payments.
You can access real-time data for valuable insights into customer shopping habits. You’ll be able to see a customer’s shopping history and preferences, which facilitates a more targeted marketing campaign. Real-time data analysis also helps your business manage inventory and create more accurate budgets.
Should you accept digital wallet payments?
There are numerous benefits of digital wallets for both parties involved in any transaction. It’s easy to integrate most wallet apps directly into your ecommerce store or POS location. For example, if you decide to accept PayPal you can use the API to add a PayPal button as one of the main payment options on the checkout page. There’s little risk to offering more payment options to your customers, whether it’s Direct Debit payments or digital wallet services.
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.