What Retailers Need to Know About Mobile & Crypto Wallets
Cash is no longer king, and mobile wallets are claiming the throne. The use of cash was in decline before the pandemic for many years as people opted more frequently for alternative payment options such as credit cards, debit cards, and various types of mobile wallets.
Covid-19 accelerated the demise of banknotes.
In effect, cash is in danger of extinction as people progress beyond carrying plastic cards to simply using mobile payment wallets, which can give consumers virtual access to a variety of payment methods, including the cash in their banks. Not only are they convenient, but according to the World Health Organization, touchless payment options such as mobile wallets are much healthier for us since it reduces the risk of contracting viruses sitting on surfaces.
As a matter of fact, according to Retail Customer Experience, digital or mobile wallet payment was the most popular POS payment option in 2020, grabbing 21.5% of transaction payment market share globally. And the preference for mobile wallets will continue growing rapidly, say analysts at Research and Market, who project a 70% spike between 2020 and 2025.
People like the convenience and security of mobile wallets, and it doesn’t just apply to traditional currencies. The fast-growing cryptocurrency market is also increasing demand for broader acceptance of crypto wallets.
For retailers, accepting alternative payment methods like mobile wallets and crypto wallets broadens sales opportunities by attracting a wider customer base. Retailers who are not already taking mobile wallets should become familiar with the technology and terminology.
Here are some must-know facts about mobile wallets:
Many companies offer mobile wallets
A quick search in your smartphone’s app store will result in a long list of service providers. Companies that provide mobile payment wallets include banks, credit card companies, brokerage firms, cryptocurrency exchanges, tech companies, cell phone companies, large retailers, and the list keeps growing. Some popular mobile wallets in the U.S. include: Apple Pay, Google Pay, Samsung Pay, PayPal, Venmo, Walmart Pay, Amazon Pay, Zelle, and Facebook Pay.
Mobile wallets vary in look and function
Different mobile wallets may offer varying features, but they have one thing in common. Mobile wallets take the place of physical methods of paying for goods and services. For the lack of a better comparison, a mobile wallet is like the leather billfold someone carries in a pocket or purse. Like the traditional wallet, it gives consumers access to their money when making a purchase. Unlike a conventional wallet, mobile wallet transactions are touchless and entirely virtual.
Mobile wallets are sophisticated financial apps
Mobile wallets can be accessed through mobile devices like smartphones, tablets, and smartwatches. Some are apps that you download and some are proprietary apps that come with a mobile device. Connected to credit cards, debit cards, and loyalty programs, mobile wallets give consumers easy access to their preferred payment methods and loyalty rewards wherever they roam. It’s convenient and secure.
Security is an attractive feature of mobile wallets
Mobile wallets don’t share actual bank or credit card data with vendors. This is good for both the customer and the vendor. Instead, mobile wallets share a unique code or token with the vendor POS system, which can only be used once. The transaction is seamless and much more secure than using a physical credit card or carrying around cash.
Most mobile wallets use near-field communication (NFC)
Instead of swiping a card, mobile wallets transfer payment information to a POS terminal via NFC technology. The customer selects the mobile wallet app on their device — using touch ID or Face ID to verify their identity — and then holds the device near an NFC-enabled POS terminal. The transaction is touchless.
Loyalty programs can be accessed through mobile wallets
Leveraging reward programs gives merchants a great opportunity to engage customers and keep them coming back. Mobile wallets can hold merchant coupons, discount vouchers, and gift cards. Customers no longer need to carry around plastic loyalty cards and paper coupons, or download yet another app — things they will avoid.
There are many benefits for merchants
Although it can seem like it’s all about convenience for the customer, mobile wallets also provide many advantages for vendors. Mobile wallet payments are quick and seamless, saving time, which can be an enormous advantage during peak season. The greater security of mobile wallet transactions lessens the risk of fraud for vendors, and they provide digital data that can inform retail planning.
Mobile wallets can also be cryptocurrency wallets
Some mobile wallets with access to more traditional payment methods also offer crypto payments. Some consumers prefer dedicated crypto wallets. Merchants should be aware of at least some high-level facts about crypto wallets, including:
- Not all crypto wallets are virtual; some investors use hardware crypto wallets — physical devices to store keys to their cryptocurrencies.
- Hot crypto wallets and cold crypto wallets refer to whether a wallet is connected to the internet or not. Hot wallets, which are connected can be convenient and have more features, but this means greater security risks. Cold wallets are like vaults that hold crypto tokens.
- Public keys and private keys are used together to access, exchange, or spend cryptocurrencies. It’s similar to the concept of having a user id and password, with the private key being the code one keeps protected.
- Online crypto wallets or web crypto wallets can be accessed through a browser.
- Desktop crypto wallets store keys on your device rather than online.
Accepting mobile and crypto wallet payments can open up a new world of possibilities for merchants. If you have a loyalty program in place, you can transition it to fit the mobile wallet model. For those who haven’t created a loyalty strategy, this could be a great opportunity to not only build one but make it available on a platform seeing a phenomenal adoption rate.
If you’ve already upgraded your POS system so that it’s EMV enabled, you already have the NFC technology needed and may be ready to start accepting mobile wallets.
Mobile wallets are the future
Mobile wallets are already a primary payment method for consumers and crypto wallets are gaining popularity. This is the future of vendor transactions. If you’re not currently accepting mobile wallets or crypto wallets, you may have many questions. Does it make sense for your business to start taking mobile wallets? Will you need to make any extra investment in your POS system? If so, how much will it cost? Heartland can help you find the answers you need by assessing your current POS and your business needs.
Get started today with Heartland Mobile Pay.
Heartland helps nearly 1,000,000 entrepreneurs make and move money, manage employees and engage customers with human-centered technology solutions that allow them to rise above the daily grind and lead their businesses into a brighter future. Learn more at heartland.us