The global digital wallet market is expected to grow at a fast pace. Increasing mobile broadband penetration and digitalization of consumer point-of-sale systems are key drivers to this market growth.
Another driving force is the security that digital wallets offer. They encrypt and tokenize payment data to protect against hackers.
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Ease Of Use
Digital wallets are a growing convenience for both consumers and merchants. According to a 2020-2022 Global Payments Report by FIS, digital and mobile wallet payments will account for 33.4% of point-of-sale (POS) spending by 2024 and will increase to 52.5% of online e-commerce transactions.
For consumers, digital wallets make the checkout process faster and easier because they eliminate the need to pull out their credit card or cash. In addition, digital wallets provide security features that decrease fraud and help to reduce chargebacks. They also enable users to access loyalty programs and other benefits. Lastly, they eliminate the need for passwords and PINs, which can be vulnerable to hackers. Some digital wallets offer contactless payments and transaction histories.
Convenience
A major driver of digital wallets is convenience for consumers. For consumers, purchasing something with the click of a button and easily sending money to friends and family is very appealing. In addition, many e-wallets allow consumers to track their spending to help them stay within their budget.
For merchants, the convenience of accepting a digital wallet is also a big draw. Most e-wallets work through tokenization, meaning the actual credit or debit card number is never shared with the merchant. This helps keep data safe and secure for all parties involved in the transaction.
Interestingly, some of the most popular wallets have social aspects built into them that have been especially appealing to younger generations. And with the rapid growth of POS-based mobile apps in China and SE Asia, where most super wallets’ operate, more omnichannel super-apps’ will emerge globally that offer the ultimate digital wallet experience.
Security
Digital wallets provide consumers with a seamless way to pay with no extra steps. They allow users to leave their physical wallets at home and complete transactions by tapping or clicking a button.
Security measures augment the convenience of digital wallets. Many of these services use tokenization to ensure the safety of customer data from hackers and other unauthorized parties.
These features also help reduce the business’s cost by cutting down on fraud claims and chargebacks.
While these benefits are attractive, it’s important to note that not all merchants accept digital wallets. This can limit a user’s ability to shop at certain locations or for specific purchases. However, e-wallet users can mitigate these limitations by utilizing identity monitoring services that alert them of suspicious activity on their phones.
Scalability
In business, scalability refers to an organization’s ability to adapt to increased workload or market demands. A successful, scalable company can grow its revenues while keeping its profit margins steady.
In the digital wallet space, scalability is defined by the flexibility of the service to meet diverse consumer needs. For instance, many digital wallet providers have expanded their services beyond payment, including BNPL (Buy Now, Pay Later) offerings and population registration management.
Some even offer perks like loyalty programs or gamification to keep users engaged and returning for more. Another example of scalability in the digital wallet space is self-sovereign identity, which gives individuals control over how their data, including career credentials, are used and shared. In addition, many digital wallets provide valuable customer insights by extracting real-time data during checkout to optimize the shopping experience.
Integration
Whether used for e-commerce, mobile payments or B2B processes, digital wallets can reduce the number of cards and cash consumers have to carry around. Moreover, they can make transactions easier and more secure.
Wallets can be very specialized and closed-loop, allowing them to offer unique value propositions within their verticals. For example, a digital gambling wallet can support payments for online gaming and betting and in-casino deposits and withdrawals.
A key to e-commerce success is removing conversion barriers, and offering consumers the payment methods they prefer can be a game-changer. Digital wallets are a great solution, especially as they provide convenient services like paying with one click or quickly sending money to friends.
Resources:
Half the World Will Use Digital Wallets by 2025, Led by Developing Markets
https://fintechmagazine.com/digital-payments/what-is-driving-the-digital-wallet-revolution
Also Read: POS Systems: Modern Sales Solution For Better Experience
