Small business guide to mobile wallets
Among all of your customers, what’s the one item that everyone seems to have with them at all times? Their smartphone.
Smartphones let us communicate with friends and colleagues, learn and connect with people and ideas, and endlessly entertain ourselves. Easy to use, connected to the world and fitting neatly in our pockets, it’s no wonder they’re so popular.
So it makes sense that we use smartphones for everyday activities, like paying for goods and services. Mobile wallets—also known as eWallets—have emerged as a payment method of choice for hundreds of millions of shoppers around the world.
If your business accepts credit and debit cards and you haven’t already made the jump, it’s a great time to get caught up on how smartphones are changing retail payments. This quick guide answers the key questions business owners are asking in 2019 about mobile wallets.
What is a mobile wallet, or “eWallet”?
A mobile wallet is a smartphone app that works like an updated version of a traditional payment card. Instead of swiping or dipping their cards, consumers pay by simply tapping their smartphone at a properly-equipped point of sale terminal.
The most well-known mobile wallets are intended for general use and are broadly accepted by businesses just like yours, such as Apple Pay, Samsung Pay, MasterPass and Visa Checkout. Other mobile wallets are closed loop and intended for use at one company, like many of the popular mobile apps offered by leading quick-serve restaurants.
These smartphone apps are backed by those same credit and debit card accounts. Alternative funding sources are also emerging independent of traditional consumer accounts. While additional security is built-in to the app, many mobile wallets also integrate a traditional PIN security layer. Then the transaction proceeds as if a traditional payment card was used. It’s that simple.
How do mobile wallets work?
Mobile wallets use proximity sensors, typically either NFC (near-field communications) or increasingly via QR codes. These wireless communication technologies create secure connections between smartphones and point of sales systems, i.e. a modernized version of the credit card terminals you use every day. Many of today’s credit cards also contain NFC technology so people can tap their cards rather than swiping or dipping.
Mobile wallets benefit from additional layers of security compared to plastic, starting with the security of the smartphone itself. Most mobile wallets have biometric security built-in, so only the authorized device owner can make a payment. The mobile wallets use secure technologies like encryption and tokenization to protect sensitive payment data. Mobile wallets build on the successes of EMV “chip card” technology.
How many people use mobile wallets?
A December 2018 eMarketer report projects nearly a billion (938 million) people worldwide will make a smartphone payment in 2019. That represents 36% of global smartphone users, a 13.5% increase over 2018. eWallet use is higher in Asia and especially in China, where more than 4-in-5 smartphone owners used a mobile payment app like WeChat Pay or Alipay in 2018.
Mobile wallet adoption is growing in the US too, though at a slower pace. eMarketer projects that 27.4% of US smartphone users will use an app on their device to make a payment in 2019. Worldpay’s 2018 Global Payments Report found that eWallets accounted for 3% of US in-store spend in 2018. That figure is projected to more than double to 7% by 2022.
Are digital wallets used online and in-store?
Many all-purpose mobile wallets—like Apple Pay, Google Pay, and Amazon Pay—can be used to pay for goods and services online and in-app as well as in-store. Mobile commerce is expanding dramatically, driven in part by payment methods that are also smartphone-native.
Worldpay’s 2018 Global Payments Report projects that mobile wallets accounted for 20% of US eCommerce spend in 2018. That figure is projecting to rise rapidly over the next five years, to 33% by 2022.
Mobile wallets are a popular online payment method as they’re both safe and convenient. Mobile wallets also help reduce shopping cart abandonment and increase conversions. eCommerce provider Big Commerce estimates that sites that encourage digital wallets for payment saw upwards of a 3x rise in mobile cart conversion.
Is the US ahead or behind in mobile wallet adoption?
According to eMarketer the US ranks sixth globally in 2019 smartphone penetration. Why? To put it simply: habit. The US hasn’t seen mobile wallets take off nearly as fast as in Asia. Engrained habits are hard to break when built over decades.
But the tide is definitely turning as consumers discover the ease, convenience and greater security of mobile wallets. A 2018 Worldpay US consumer behavior report found that 66% of US consumers believed that smartphones would replace credit and debit cards as the main payment method within the next five years. Not surprisingly younger shoppers were even more bullish, with 80% of Millennials seeing smartphones as the payment method of the future.
Are we finally approaching a tipping point in mobile wallet adoption? Mobile payments are finding critical mass in universities, mass transit systems, and large sporting venues, exposing the technology’s ease to millions. The more people try them—especially where the convenience advantage of smartphones is overwhelming—the more likely they’ll eventually overtake habit.
Why should my business accept mobile wallets?
Accepting mobile wallet payments offers three clear benefits for the small business owner:
Accepting mobile payments is convenient. With a smartphone we don’t need to carry around encyclopedias to look up information. Why would we carry around a plastic payment card if that information was securely stored on your device for easy use?
What’s good for customers is good for the businesses that serve them. Mobile wallets are fast, convenient and simple, making checkout a breeze. Serving more customers quickly is exactly what most businesses want, and it’s what mobile wallets deliver. Reducing friction at checkout is a convenience win-win for consumers and businesses alike.
Accepting mobile payments is secure. Security and data privacy is understandably more important than ever to consumers. Payment fraud remains a serious concern for everyone in the payment ecosystem: consumers, businesses, financial institutions, and the payment partners that serve them.
We’re still striving for payment systems that are 100% protected from fraud. In the meantime, mobile wallets offer additional layers of security that help contribute to the most secure payment environment possible.
Accepting mobile payments is easy—especially for small businesses. Mobile wallet acceptance is built into the majority of point of sale systems, from newer credit card terminals to integrated point of sale systems. You can even accept payment from a mobile wallet with a mobile device of your own. Accepting mobile wallets is easy to set up and requires minimal training for your staff.
Are you ready to start accepting mobile wallets at your business? Worldpay partners with small businesses just like yours to make accepting payments safe and secure. You can start by connecting with one of our payments experts today.