Digital wallets including Apple Pay, Google Pay and Amazon Pay, are becoming frequently popular ways for customers for making online payment. Our latest research found that 50% of European consumers have used a digital wallet at least once in 2020. And 80% are planning to use an automatic in-store payment system in the next 12 months – 40% indicate they plan to do it regularly.
This should probably not come as a surprise. More than 50% of web traffic now comes from mobile devices. And this is reflected in the growing number of customers shopping on their smartphones or tablets. Forrester’s research shows that half of America’s largest markets now sell online through smartphones or tablets.
Despite growing consumer demand, many American retailers are not offering customers digital wallets such as Apple Pay or Google Pay as a form of payment. That’s a mistake.
Retailers that do not offer customers the opportunity to pay using their preferred payment method run the risk of losing sales – 60% of customers tell us that they will pay if they cannot pay with their preferred payment method in which the users can scan the card and do self-checkout. You must need to find the reliable and uninterrupted Scan & Go Self-Checkout payment solutions.
But that’s not all. Forward-thinking retailers offer Apple Pay and Google Pay as part of their overall payment mix to streamline authentication and increase authorization rates. Or, in other words, to earn more income. We will tell in this article how. But first, let’s remind ourselves what a digital wallet is.
Understanding Digital Wallets
There are 3 major kinds of digital wallets as per digital wallet app development. First, there are pass-through wallets such as Apple Pay and Google Pay. This wallet stores the user’s card details and security information, acting as a mediator in traditional card transactions. The wallet is not included in the system of money transfer, hence the term ‘pass-through.’
The pass-through wallet is just a proxy for ‘normal’ card purchases, and the mechanics are mostly the same. The main difference is that the pass-through wallet generates unique tokens for each transaction, so actual card details are never shared.
Stored-value wallets, such as PayPal and Alipay, are another digital wallet commonly preferred by consumers. The users need to load these wallets with funds before dealing with them. However, in some versions, the required funds are automatically loaded when a transaction is made.
Complete closed wallet set. This can only be used with certain retailers. The concept is similar to a store loyalty card, in which the retailer sets any credit line and cost limits. A Three-way digital wallet allows retailers to generate more revenue.
1. Promote Conversions at Checkout on Mobile Devices
To fully reap the benefits of the shift to mobile commerce – the opportunity to increase sales – retailers have put a lot of time and effort into optimizing the mobile experience.
However, the data show that many people have ignored the checkout process as part of this task. For example, research found that nearly twice as many customers leave their carts on mobile devices than consumers who shop on a desktop.
Friction at checkout is the most likely reason customers leave their vehicles. You need to input card details and shipping details on mobile devices can often be a clumsy experience, especially when someone is shopping on the go. And if the checkout page is not optimized for mobile, it becomes more complicated.
Retailers can largely eliminate this friction by allowing customers to make payments with the help of Digital Wallet software. With payment details and shipping information cached in the app, customers are not required to enter any details.
It even facilitates the users to check out in just one or two clicks, creating a simple and fast payment experience optimized for mobile.
2. Streamline Authentication
Card-based payments are subject to increasing checks. Multi-factor authentication protocols – especially 3DS2 – require customers to provide something they have, something they know, or something they can proceed with before a transaction occurs.
Primarily, research has shown that consumers prefer this increased security. But, at some point, security becomes a hassle, forcing consumers to abandon their purchases. Our data show that 12% of European retailers have seen a decline in approval rates due to the initial impact of strong consumer certification (SCA) requirements.
3. Improve Authorization Rates
The sale is not completed until the issuing bank authorizes the customer. And our data shows that two-thirds of retailers operating with authorization rates of 89% or less have lost most of their revenue due to pay cuts.
Offering and encouraging customers to use a digital wallet at checkout is one way for retailers to improve their authorization rates and generate more revenue.
This is because the embedded security of using a digital wallet also means that presenters are more likely to authorize these payments. Depending on the merchant, the increase in authorization rates can be up to 10% when using a pass-through wallet.
Understanding the world of digital wallets is an entirely different thing, and applying to the right people and the right markets is another matter. Fix traditional checkout billing systems, and retailers will generate more sales and more revenue. Get it wrong, and they will actively give their competition a competitive advantage.
Author’s Bio – Nikunj Gundaniya, Product manager Digipay.guru, one of the leading Digital Wallet Software, which provides mobile finance application development services. He is a visionary leader whose flamboyant management style has given profitable results for the company. He believes in the mantra of giving 100% to his work.