Explaining the digital payment boom

Like e-commerce, digital wallet use was affected by the pandemic. As shoppers sought contactless ways to pay in stores and shopped more online, digital wallets offered physical distance and convenience. Now, with new consumer habits in place after more than two years of adapting, the digital wallet market is forecast to grow by 18.9% year-over-year through 2028.

Cashless payment has become the newest trend. The digital wallet apps have shown to be successful for both consumers and companies. Professionals from various fields, including network operations and banks, believe that mobile payments will swiftly replace traditional wallets in the long run.

As mentioned by Forbes: “… more than 4 in 5 Americans used some form of digital payment in 2021, according to McKinsey’s 2021 Digital Payments Consumer Survey. This includes browser-based or in-app online purchases, in-store checkout using a mobile phone or QR code, or person-to-person (P2P) payments.

Advantages of Digital Wallets

–Reduce Transaction Fees – Merchants can lower bank transaction fees by issuing a payment card of their own, usable on an e-wallet. It’s like a store gift card, except the card is digital and there is no cost to issue a plastic version. Plus, it is not a bank card, leaving the bank out of the payment loop, reducing transaction fees.

-Increased Security – Another issue is cyber security. It’s no secret that credit card data is a massive target for hackers. An e-wallet transaction is different than a credit or debit card transaction. It uses tokenization technology. Unique, randomly generated identifiers, or “tokens” replace the credit card numbers for each purchase. After the purchase the number is useless. It’s the most secure online transaction method to date. 

–Convenience, particularly for younger shoppers. While 40% of consumers of all ages said they always have their mobile phone within reach while they shop online, only 20% of shoppers younger than 55 have their credit card handy every time they shop.

–Organize Your Payments: Most e-wallet apps organize all your payments in an easy-to-access way. It allows your online shoppers to make payments directly from their smartphone, laptop, desktop, or tablet. It doesn’t matter what device they are using.

–Offer Numerous Rewards to Your Customers: Arguably the most significant benefit a digital wallet offers to your customers is the additional bonuses and rewards. It means you not only provide your customers a way to pay faster for online purchases but also get numerous rewards. These benefits can be in the form of cashback and special rewards, allowing you to maximize your engagement level after every transaction.

For merchants, there is significant potential for accepting digital wallet transactions. The younger generation is married to their mobile technology. Making buying convenient for them to pay with digital wallets makes sense. According to Visa’s 2022 Back to Business Study, 73% of small businesses surveyed said new forms of digital payments are fundamental to their growth.