Everything you need to know about digital wallets
Digital wallets are getting more and more popular in the US and globally. With everything stored in an app, users can do a wide range of things with much greater convenience. We will now explore what digital wallets are, how they work, and why they’d be good for your business.
Digital wallet in a nutshell
A digital wallet is a software-based system that functions as an app on the user’s mobile phone. It supports different forms of payments by accessing the information stored securely in your mobile phone, as well as storing credit card information, so you can make payments conveniently for both brick-and-mortar and online stores.
Digital wallets usually come in the form of an app. When you activate it, it will automatically connect with your card network to create a unique token in the wallet. Whenever you make a transaction, the wallet will do so by matching the token with your card network and securely accessing other data stored on your phone.
Besides making payments, they can also store coupons and reward points and other types of personal information, such as gift cards, IDs, and transport tickets. With more robust password mechanisms, you no longer need to worry about data theft or forget their passwords.
Types of digital wallets
Digital wallets are excellent news for retailers. Customers can now conduct contactless payments with new near-field communication technology. All they need to do is to hover their device over the card reader. This aspect can work for an extensive range of transactions, from buying a coffee at a cafe to taking public transport.
Digital currencies are also suitable for handling online transactions. At checkout, users will have the option to choose their appropriate wallet and credit card. This works for apps, websites, and in-app payments. In fact, digital wallets are the only trading method for some transactions like buying cryptocurrencies.
- Peer-to-peer (P2) payment
Digital wallets nowadays also support P2P payments, where you can send money directly to your peers’ wallets. Imagine the convenience of splitting bills or cab fares instantly via your mobile app instead of counting money bills and coins.
- Data and coupon storage
As well as managing payment, some digital wallets are specifically for information storage and sharing. For instance, some airlines have digital wallets to store your boarding pass, so that you can check in and board more quickly. Other examples include shopping coupons, reward points or even some personal identifications.
Though it’s good to know the basic types, most digital wallets can perform a combination of the functions above.
Key advantages of digital wallets
Adopting digital wallets for your business, no matter if you’re an offline and online business, will make yourself far more attractive to your customers. Let’s put yourself in the customers’ shoes and see why digital wallets stand out:
- Faster transaction
With this new technology, you can make transactions much quicker. All you need to do is open the app, then pay or receive money via in-app functions. You can also create a QR code with your wallet and hover your mobile phone over a card reader for contactless transactions.
There is no need to carry many banknotes and stacks of credit cards in a bulky wallet. Everything can now be done with your mobile phone, from paying for a bus ride to buying coffee or visiting your favorite online store.
All digital wallets use some form of biometrics, like Face ID and fingerprint. So, if you have a digital wallet, it is only accessible by you, and there’s no need to worry about losing your data. Digital wallets also encrypt all transactions and data, so rest assured your data is in good hands.
- Less contact
This goes without saying. With everything tap-and-go or done digitally, you can have less contact with people or items around you, thus better maintaining social distancing.
When there is a transmission, the digital wallet only sends a token number, rather than the real credit card number. With the tokenization technology, the randomized tokens in your wallet and the transmissions will correspond, authenticating your transaction as genuine.
Digital wallets on the rise
Since COVID19, consumers have dramatically changed their purchasing behavior. People are either staying at homes, relying on eCommerce, or avoiding contact and keeping social distance whenever they need to be out.
This new reality has made digital wallets an essential part of life. You can minimize the need to touch anything and buy things securely online and trading among peers with them. Right now, physical stores are also replacing old payment hardware to make their storefronts compatible with tap-and-go payments, and this trend is surely picking up. With eCommerce on the rise, they are almost becoming a must-have for online stores. The prevalence of them has even driven the stock market boom and cryptocurrency boom, where online trading is a widespread way to trade, if not the only method.
However, some consumers may have privacy concerns, as they believe companies may have easier access to customer data since everything is stored in a mobile app. That’s why, as a business owner, showing to customers that their data is secure is essential, which the token and encryption technology will make data theft very unlikely.
What to look out for
When you pick your digital wallet framework, do remember to look around and consider details like compatibility, price, and technical support. If you’re running a bricks-and-mortar business, pay extra attention to the POS systems and make sure they can work seamlessly for you and the customer.
At Payline, we have a wide range of digital wallet solutions for your POS and online stores. We specialize in mobile payment processing and integrated POS solutions, so your business will be ready to cater to a wide range of customers. Speak with us today and see how we can help.