Digital wallet technology: 4 benefits savvy retailers can leverage
Digital wallet technology wasn’t always as attractive as it is today. In fact, there was a time where the notion of paying with a digital wallet was so unfamiliar that just under half of online consumers did not know what they were.
So, why would retailers opt to include digital wallet technology as a payment option for their customers today? What has really changed since the “dark ages” of digital wallet technology?
Digital wallet technology: a brief history
A lot has evolved about the way digital wallet technology is used. When digital wallet technology was introduced in the mid-1990s, the idea of paying for goods using digital money was an exciting concept, however, the struggling adoption rate told a very different story.
Back then, using a digital wallet meant downloading a desktop application. Slow internet connections and regular application updates meant more work for the user to perform before being able to use their new digital wallet. User awareness was an issue, too. A survey by BizRate.com found that only 58% of online purchasers were aware of digital wallets.
How digital wallet technology made a comeback
Despite adoption rate woes, digital wallet technology trotted along. Around the 2000s, digital wallet technology was reimagined. In a bid address poor adoption rates and the general user confusion surrounding the use and capabilities thereof, digital wallet technology moved from being a heavy or “fat” client-based application to a server-based or “thin” solution.
It was around the same time that vendors began to understand that too many variations of the same technology created user confusion, and even worse, incompatibility issues.
This move to a unified server-based digital wallet technology standard, called Electronic Commerce Modeling Language, coupled with a stronger marketing drive–where vendors partnered with card issuers–saw the digital wallet industry make massive strides towards an easier-to-adopt digital wallet solution.
Today, more has changed about the way we interact with digital wallet technology. With a mobile app, you can walk into a store, pick your groceries, arrive at the till and use your phone to pay for your groceries–not cash or your debit or credit card.
While using your phone to pay for your groceries, a cappuccino, or a pair of trainers may seem ‘cool’, retailers have the opportunity to create more cost-effective and data-driven businesses, where their customers experience convenience, higher levels of security, and a more intimate purchasing experience.
If you’re a retailer that’s on the fence about adopting digital wallet technology for your business, here are four benefits your business can exploit if you choose to accept mobile money:
The typical mobile payment transaction involves a number of parties. While the consumer ultimately pays the retail price for a product, as a retailer, you’re used to paying a transaction fee to your bank and other vendors, too. A fee you’ll likely have missed is referred to as a “switching fee”. A switching fee is charged by the acquirer or specialist company that manages that provides the technology which processes the actual transaction.
In some cases, as with TuYu, retailers are not subject to any switching fees because TuYu’s digital wallet allows for funds to be added without the need for credit card to be linked to it. This means that all the typical transaction fees do not apply. Without transaction and switching fees, your business is able to receive a larger margin on each product sold.
Mobile phones have become an inescapable part of life. While they may seem like a nuisance in a public setting, robbing people of more intimate connections at gatherings, mobile phones are still communications devices and therefore important to have.
When it comes to mobile money, digital wallets and mobile phones are as close to a perfect marriage as possible. Being able to transact with a mobile phone allows customers to transact faster, eliminating the need to pull out a wallet, find the right denominations of cash or the correct card, and receive change.
Using a digital wallet, transacting is as seamless as a simple QR code scan, or a wave of a smartphone, and your customer is on their way. This level of convenience is important to consumers. According to research by the European Central Bank, convenience was cited as a strong influential factor for consumer payment behaviour.
Card fraud is as much of a serious problem for South Africa as it is for the rest of the world. In 2015 alone, South Africans lost R252.2 million to fraudulent credit card activity, and a further R257.1 million fraudulent debit card activity.
Giving your customers the option to use digital wallet technology decreases the possibility of card fraud considerably. Because digital wallets require a one-time setup, the user’s card information is entered prior to transactions with a retailer. This means that future transactions are Card Not Present (CNP) transactions.
Typically, fraudulent CNP transactions take place when credit or debit cards have been skimmed as cards are presented for the completion of a transaction. In the case of a digital wallet, the opportunity for a criminal to skim a credit or debit card is non-existent as the card is never produced for the transaction once the digital wallet is created.
Digital wallets, therefore, present the retailer with the opportunity to create a safer transaction experience for the consumer which results in greater consumer satisfaction and confidence in the retailer, and possibly more return purchases.
Deeper customer insights
Having the ability to dig deeper into the inner working of your customer’s mind is what every marker strives for. Digital wallet technology has the potential to help marketers get a closer look at their customers than ever before.
Because mobile devices are as much a part of anybody’s lives, storing everything from a list of contacts to personal information like gender, age, address, and buying habits, marketers have the ability to peer deeper into the lives of their customers. This presents retailers with the opportunity to create more intimate and impactful marketing experiences for consumers.
Digital wallet technology is changing the buying patterns of South Africans because it’s safer and more convenient. For retailers, mobile wallets offer a more controlled experience, allowing consumers a quicker transaction speed, while eliminating the possibility of card fraud due to card skimming. Access to analytics based on consumer profiles presents retailers with even greater insight into their customers along with the ability to create more delightful customer experiences.
Want to integrate digital wallet technology into your business seamlessly? Call us on 021 812 1495/6.