“Digital wallet” is no longer a strange term to users nowadays. First introduced in 2016, the digital wallet trend has risen significantly, especially after the pandemic. A global survey from MasterCard would have us believe cash is verging on extinction, with 82% of respondents saying they believe contactless payment options are “cleaner” during this difficult time.
And by 2025, it is expected to become the second most preferred payment method. But what drives this digital wallet’s success?
#1: Digital wallets offer a better E-Commerce experience
E-Commerce and the cashless society have become inseparable in recent years. In fact, according to EPRS, at present, E-Commerce accounts for more than 75% of overall global retail growth.
Some researchers predict this trend will continue, and the online share of total retail sales will reach 22 % by 2022. So it is clear that the E-Commerce trend will not cool down within the next few years. And digital wallets are closely connected to E-Commerce platforms.
Digital wallets allow a smooth E-Commerce experience with fewer clicks to check out. Online payment is much more preferred when customers shop online, thanks to its security and convenience, compared to the cash payment option. With fewer steps required, customers are more likely to complete their purchases, and lower cart abandonment will lead to more revenue for business owners.
Using a digital wallet while shopping online is much simpler than paying via cards. It requires less typing in card number steps than credit or debit cards. With a mobile wallet, you can pay quickly by holding your phone over the payment terminal and verifying the purchase. Most transactions can be completed in just a few seconds.
Thus, users can also reduce the number of places where their card numbers are stored without sacrificing a speedy checkout.
#2: A digital wallet is a much safer choice
Data security is always a big concern regarding digitalization, especially when money is involved. While credit card data is a massive target for hackers, digital wallets use tokenization and biometric authentication technology to encrypt transactions.
Tokens, also called random payment codes, cannot be used again and often rely on certain security features, including biometrics, to authorize a payment. After the purchase, the number is useless. It’s the most secure online transaction method to date.
Moreover, the data stored in mobile wallets are encrypted, meaning your actual card account numbers aren’t transmitted while making a payment. Your full card account number isn’t displayed anywhere in a mobile wallet, meaning prying eyes won’t be able to capture your card number for future use.
#3: Offer more promotion programs when shopping online
Exclusive promotion is one of the biggest factors for digital wallet success. Merchants can send personalized coupons that customers can download and use.
Or it can also be a discount code that customers can use when purchasing online with digital wallet partners. These discount codes can help users to save huge amounts of money.
Since 85% of installed offers stay unused on the devices, merchants can constantly contact their customers by updating offers regularly or sending reminders to customers through push notifications. Customers can access the coupons and pay using the same device, increasing opportunities for more sales.
Furthermore, if your card offers cashback or other rewards, you’ll still receive those when using that card in a digital wallet.
#4: Lower transaction fee
Last but not least, the main reason why users prefer digital wallets to other online payment methods is because of the transaction fee. Usually, most online methods may charge you a certain transaction fee when you transfer money from your bank account to others.
But with a digital wallet, transactions are often free of charge or cost users a small amount of money.
Merchants can lower bank transaction fees by issuing a payment card that is usable on a digital wallet. It’s like a store gift card, except the card is digital, and there is no cost to issue a plastic version.
Plus, it is not a bank card, leaving the bank out of the payment loop and reducing transaction fees.
Digital wallet success is understandable, if not inevitable, in this digital age. Especially during and after the COVID-19 pandemic, when there are huge demands for contactless payment platforms.
So if your company plans to step into the E-Commerce field, don’t forget to integrate an e-wallet into your system. It might be a game-changer for your business to rise above the competitors!
As CEO of Techvify, a top-class software outsourcing company based in Vietnam, I focus on pursuing my passion for digital innovation. Understanding the customer’s pain points to consolidate, manage and harvest with the most satisfactory results is what brings the project to success.