They say habits are like a comfortable bed, easy to get into but oh so hard to get out of. As the world emerges from the pandemic, the conversation has turned to the dramatic shifts to consumer preferences and behavioral habits and whether we'll see things revert to pre-pandemic norms or are we destined to remain in our proverbial comfy beds and accelerate further into these new consumer practices.
Among the areas most profoundly impacted has been digital payments – and the rise of digital wallets. In fact, according to a recent study⁽¹⁾, total spend via digital wallets is expected to exceed $10 trillion in 2025, that's up from $5.5 trillion in 2020 – a whopping 83% growth in just five years!
For those who may be unfamiliar with the technology, digital wallets, also referred to as e-wallets or mobile wallets, provide consumers with the ability to store valuable information on various physical payment cards typically carried in one's pocket. Among the popular and widely used digital wallets are Google Pay, Amazon Pay, Apple Pay and Visa Checkout.
In today's highly competitive market, it is critical that merchants streamline their payments processes and appeal to customer needs. With the recent surge in mobile payments technology adoption, here are key benefits merchants need to know as they assess whether to incorporate digital wallets into their business operations.
For today's modern consumer, speed and simplicity are at the core of any positive shopping experience. Digital wallets allow customers to store information for their growing collection of credit cards, enabling customers to avoid the need to enter payment details each time a purchase is made. Upon checkout, an increase in complexity leads to a decrease in conversion rates. In fact, overall, 44%⁽²⁾ of consumers choose which online businesses they buy from based on the overall checkout experience, and more than half (53%) of all consumers agree that a poor checkout experience will result in them not purchasing from an online business again. For merchants, accepting digital wallet payments reduces complexity and, in turn, cart abandonment.
Another key benefit of offering digital wallet payments is increased security and reduced risk for both merchants and customers. For example, tokenization technology and encryption create a high-security standard for all information being stored on a digital wallet system, leaving sensitive information inaccessible by any third-party or cybercriminal - a significant differentiator in comparison with debit and credit cards manually keyed at checkout. Knowing this, it should come as no surprise that experts forecast that by 2025, 50.1% of U.S. smartphone users 14 and older will be using their devices to make payments that they might have made in the past with cash or plastic.
Digital wallets also feature various forms of biometric authentication, including fingerprint scanning, facial recognition, heartbeat analysis and even vein mapping.
Perhaps the most significant benefit a digital wallet offers customers is reward programs and special offers, which are often a driving force for increased sales and profit. Merchants can take advantage of these mobile wallet capabilities to offer more highly targeted customer service and value incentives and can stay in contact with customers by regularly updating these offers. By syncing these offers and perks with mobile wallets, merchants can offer their customers the convenience of having their balances automatically applied to their purchases, leading to more sales.
While cash is and will continue to remain an essential role in the payments landscape, at least for the near future, alternative payments options will have a continued and according to many experts, a growing footprint.
Qualpay is a fully-integrated payments platform that utilizes the most up to date technology to reduce costs and streamline back-office operations. Its comprehensive system addresses and resolves the payment challenges businesses face, ensuring a stronger, more robust infrastructure that allows companies to focus on growing their business. Qualpay's reporting intelligence and data analytics allow customers to quickly and efficiently manage their payment finances, saving them both time and money. Simply put, Qualpay provides a better way to manage payments. For more information, please visit www.qualpay.com.