3 ways your customers are using digital wallets
What’s a digital wallet and how do digital wallets work?Digital wallets refer to software that allows customers to store their credit or debit card payment information on their electronic devices including smartphones, tablets, computers, or even wearable devices. Most often, customers use this payment information on mobile and wearable devices (such as smartwatches).
These wallets allow customers to pay for things without having to carry a physical wallet. When customers input all of their card information into their digital wallet, the wallet encrypts the information for fast, safe transactions.
Mobile wallets are a form of digital wallet and allow customers even greater accessibility to their credit cards. Most people always have their smartphones in hand, and smartphones allow customers to always have their payment cards at their fingertips. Mobile wallets can hold card information for all the major card issuers – Visa, Mastercard, American Express, and Discover.
Another benefit of mobile wallets is that they allow customers to not only keep their payment cards in one place but can also hold airline tickets, concert tickets, and even specific retailer loyalty cards. While mobile wallets are digital wallets, not all digital wallets are mobile wallets. Now that you know more about digital wallets, let’s take a look at the three ways customers typically use them.
Use #1: Contactless paymentsThe broadest use of digital wallets is for in-person contactless payments. Consumers usually use smartphone digital wallets on mobile apps like Apple Pay® on iPhones or Samsung Pay® or Google Pay™ on Android devices. These apps help customers pay for things on the go.
For smartwatches and other wearables, there's also FitBit Pay™ and Garmin Pay™. These payment apps use near field communication (NFC) to create a magnetic field that enables the card to transfer information to the card terminal. Most digital wallets also require another form of identification – facial recognition, fingerprint, or passcode. Generally, this use of digital wallets is faster than EMV chip cards, giving customers a fast, secure way to pay. And because they’re contactless, in-person digital wallet payments can be more hygienic than normal card payments. Customers can simply look for the contactless symbol on the card terminal to know they're able to use contactless payments.
Use #2: Single click mobile purchasesThe next use of digital wallets is mobile purchases. With these types of purchases, customers can purchase from your ecommerce website with a single click, utilizing payment information saved in their mobile wallet. This provides a seamless, integrated shopping experience for the customer. Again, you can see how convenient digital wallet payments can be for customers. When a website accepts mobile wallet payments, customers don’t need to spend time inputting their credit card or debit card information into your website. Instead, they simply authorize the mobile wallet payment and the transaction completes. Accepting mobile wallet payments on your ecommerce site can help you maximize sales and minimize cart abandonment.
Use #3: Transferring money between people and businessesThe last popular use of digital wallets is transferring money between people and businesses. Digital wallets let consumers pay their friends and pay businesses right in the app. This makes it easy for them to pay a friend back for a coffee, order food delivery, and even grab a ride. Because the digital wallet stores their payment information, customers can transfer money quickly and easily to friends and businesses alike.
Now that you know how customers are using digital wallets, let’s talk about the safety of digital wallets.
How safe are digital wallets?
As a small business owner, you’re concerned about keeping your business and your customers safe. To that end, you’ve probably wondered about the safety of digital wallets. The answer is simple – digital wallets are a safe and secure way to pay. There are two key reasons for this payment security: two-step authorization and tokenization.
Two-step authorization is a term that means an added layer of security ensures a secure transaction. So not only do you need to have the mobile device present, you also need to provide another verification: a fingerprint, facial recognition, or secure passcode. Therefore, even if someone steals the customer’s smartphone, the thief wouldn’t be able to access the payment data.
The other security feature with digital wallets is tokenization. Tokenization is the process by which confidential information (like your customer’s actual card number and other credit card details) swaps for non-confidential information (a random string of numbers). The token can guarantee the same functionality of the credit card data, while only being useful in a specific transaction. That means, even if a thief were to steal the token, it would be useless outside of the single transaction that just took place.
As we’ve discussed, digital wallets are a secure way for your customers to make payments at your business. Now, let’s talk about how small businesses like yours can accept digital wallet payments.
Accepting mobile payments
While digital wallet payments may seem like an intimidating process, it’s simpler than it seems. To accept mobile wallet NFC payments in-person, you’ll need two things: a payment terminal that accepts NFC payments and a payment processing plan that accepts mobile wallet payments. With the current popularity of mobile payments, your current terminal may already be ready for NFC acceptance. For a more detailed article on NFC payments, click here.
To accept mobile wallet payments online, you’ll need to work with your ecommerce site provider. Many ecommerce platforms offer digital wallet integrations. You’ll also need to work with your payment gateway provider to ensure your business’s ability to accept digital wallet payments.
In this article, we’ve discussed digital wallets, the ways your customers are using them, and how accepting mobile payments can help your business. With added security and efficiency, these payments can help your business continue to meet the needs of your customer.
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