As online and mobile businesses continue to grow, and with the emerging technologies and trends of the in-store experience, traditional retailers are obliged to reassess their positions, offering, and approaches. Retailers now have to find new and powerful ways to connect with consumers. In today’s fast-growing industry retailers must build a streamlined and online shopping experience to engage the customer. And digital wallets provide a powerful means of doing this.
Digital wallet technology enables retailers to integrate a simple one-click payment option within the wallet. And such contactless payment solutions cater to the diverse needs of customers purchasing online or offline.
In this context, payments are increasingly recognized not only as an essential process to be handled but also as an opportunity.
What Are Digital Wallets And How They Operate?
A digital wallet is also called a mobile wallet or eWallet. This digital wallet system securely stores users’ payment information and passwords for multiple payment methods and websites. It works through the app on the smartphone. This digital wallet secures data through encryption and passwords.
Through E-wallets we can process payments and transfer money from a mobile phone using one click or top-up & bill payment solution. It can be also used to store loyalty details and digital vouchers.
Below are some examples of the most popular digital wallet for retailers:
- Google Pay
- Apple Pay
- Amazon Pay
- Android Pay
- PayPal One Touch
- Samsung Pay
- Visa Checkout
Digital wallets are powered by a technology called Near Field Communication (NFC). The NFC acts as an intermediary between a smartphone and a retailer’s compatible payment terminal. At the time of payment, it only takes a few taps to make the payment.
Why Retailers Are Building Digital Wallets?
1. Increased Security And Mitigate Risks:
Security should be at the top when setting up a digital wallet as any breach of security can cause customers’ information to be stolen. In this way, digital wallets have various security protocols that mitigate the risk of security breaches ranging from tokenization and fraud management through biometric authentication.
Tokenization technology is used in E-wallet which replaces the customer’s primary account number with randomly generated numbers. Thus, the information can be transmitted without revealing the actual bank details. And the generated number will be useless after purchase.
Biometric authentication adds an additional layer of security to the digital wallet by requiring a fingerprint or facial recognition to access the wallet. Thus, It is the most secure online transaction method ever.
2. Reduce Transaction Fees:
Digital wallets allow retailers to minimize transaction costs for the customer and their costs. The closed wallet model eliminates the cost of banking transactions and thus it will also reduce the transaction fees for the customer.
Digital wallets may also eliminate the other costs such as the costs of the retailer to produce physical retail cards as there is no cost to issue a plastic version, receipts, and other printed communications with customers. Merchants can reduce bank transaction fees by issuing usable, self-payment cards on e-wallet.
3. Enhance Customer Engagement And Experience:
One of the most significant benefits that digital wallets offer to retailers is the platform it builds long-lasting loyalty and increases the customer base and enhances the customer experience as well. Retailers can customize a wallet to reflect how their brand proposes to operate. They can communicate with the customers and offer services such as loyalty schemes and special offers.
Digital wallets provide retailers with extensive data on customer preferences and behavior. Through this data, retailers can provide special offers and predictive purchase recommendations to their customers.
To build a robust contactless payment solution for the retail industry, you have to collaborate with the right technology partner. Therefore seek the best fintech solution providers who have the skills and experience to develop digital wallets. And they must be flexible and pioneer in keeping up with the changing needs of consumers in an ever-evolving digital world.
4. Speed and convenience:
The digital wallet speeds up both the online and in-store checkout process, which will improve the customer experience. This, in turn, will result in more loyal customers. With the use of digital wallets, customers no longer need to wait in a long queue for EMV chip card payment to clear. They just need to wave their phone to the terminal and the payment process will be done easily.
Furthermore, it will be easier for people to pay for goods in your store and therefore there will be fewer abandoned shopping baskets as customers can safely checkout with just one-click.
5. Increase Sales:
Merchants can send customized discount vouchers to their customers which they can download and use. However, it is impossible for clients to use all the offers. Almost 85% of installed offers stay unused on the devices.
This enables retailers to keep in constant contact with their customers by regularly updating their offers. Customers can use coupons and pay using the same equipment. And that could lead to increased opportunities for more sales.
Deployment of a well-executed digital retail wallet can provide better payment security, lower operating costs, and increased revenue. Retailers must upgrade their business to provide a smoother and better experience to the customers, to accelerate the market and, to meet emerging requirements.
The technology is available for businesses interested in incorporating digital wallets into their operations, and the opportunities to empower consumers and other stakeholders are endless. It’s simply a matter of finding a digital wallet technology partner that is a good match for your company and can adapt and expand with it in the future.