Last editedNov 20223 min read
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.
Here we look at E-Wallets, how they work and how they can benefit your customers and your business.
What is an E-Wallet?
An E-Wallet, also known as an electronic wallet or mobile wallet, goes a long way towards facilitating frictionless purchases. Mobile wallets use near-field communications technology to enable consumers to make contactless payments using their mobile device, tablet or smart watch instead of using a physical card. Unlike a digital wallet where the money remains in the bank account, an E-Wallet is preloaded with money which is then used for transactions.
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. Digital wallets only store payment information, communicating with your bank account to process transactions, whereas E-Wallets process the transaction directly.
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 three types:
· Open Wallets
· Semi-closed Wallets
· Closed Wallets.
Open Wallets are issued by banks to the user, allowing them to transfer funds or withdraw money remitted to their account in cash at ATMs.
Semi-closed Wallets allow users to receive money into their bank accounts but they don’t allow cash withdrawal. Users can also transfer funds to other users of the same payment portal.
Closed Wallets can be issued by private companies or merchants, enabling the customer to make direct purchases of goods or services provided by the issuing party. Funds cannot be transferred to a bank account, nor can cash be withdrawn from the E-Wallet.
Some of the most popular Open E-Wallet providers include:
Some of the most popular Semi-closed E-Wallet providers include:
Examples of Closed E-Wallets include:
· Amazon Pay
· Qla Pay
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. 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.
Benefits of accepting E-Wallet payments in your business
The benefits of accepting E-Wallet payments for customers also benefit your business. By eliminating friction at the point of sale by allowing an E-Wallet payment, 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 move and the more pleasant the customer experience. E-Wallets also allow users to make higher value payments in-store than contactless cards do without entering the pin code.
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.
Find out more about the best digital wallets on the market.
We can help
Many merchants need a way to securely collect payment information from their customers in order to process a transaction, with payment gateways the traditional solution. GoCardless enables businesses to collect payments directly from a customer’s E-Wallet or bank account. We provide an easy and cost-effective solution for both recurring and one-off payments.
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.