Globally, digital wallets are now the leading form of payments for online shoppers. Their global market share now eclipses that of credit cards and bank cards, and in Asia Pacific it accounted for more than a third of payments.
For businesses, digital wallets bring the promise of introducing whole new swaths of customers, driving conversion of sales, and enabling expansion into new markets – geographically and into never-before-explored customer territories. For consumers, digital wallets offer a new and better way to communicate their purchasing preferences and engage with a business.
In Australia, we are already among the biggest users of tap-and-go payments in the world, and as the process of making payments becomes almost invisible, the growth of digital wallets is proving a game changer for Australian businesses. So, what exactly are digital wallets?
Simply put, digital wallets enable consumers to store their credit or debit card information in their smartphones and make contactless payments, eliminating the need for a physical wallet. While a simple idea, the potential for this technology is huge. Beyond payment information, digital wallets offer the potential to hold loyalty cards and even driver’s licenses, akin to a physical wallet. For businesses that already offer tap-and-go payments, this is where the true potential of digital wallets lies.
In the past six months, Australia’s largest corporates have started making future-looking investments in the new technology. Supermarket giant Woolworths announced that it will begin allowing customers to use their iPhones to collect and redeem rewards points by storing loyalty cards in their Apple Wallets.
Meanwhile, Australian fashion retailer Country Road has made moves to bolster its retail strategy by partnering with loyalty card wallet provider, Stocard. Through implementing a mobile customer loyalty program via the digital wallet, Country Road aims to better engage its membership base that makes up 70-80 per cent of its revenue.
But it’s not just Australian retailers that are realising the huge potential of digital wallets. In recent months, Australia’s largest banks including Commonwealth Bank of Australia and NAB have switched on digital wallets as a way of boosting their share of the customer wallet. Why? It all comes back to choice.
Australian consumers today are spoilt for choice. With so many options now at their ﬁngertips, they’re quick to move on and hesitant to come back if the experience is anything but seamless. Sites too slow to load, security that seems shaky, or checkouts that require too much information are enough for consumers to take their business elsewhere.
The same rule that applies to how they buy, applies to how they pay. Consumers want things their way. For years, checkout was considered an afterthought – the inconvenient means to a hopeful end. But as digital commerce has ramped up, so have customer demands. Online shoppers want choice, but many merchants haven’t always been willing or able to oblige. Those that have, are putting digital wallets at the centre of their growth and expansion strategy.
Guzman y Gomez is one of Australia’s fastest growing fast food companies, with more than 80 restaurants and counting in Australia, and quickly expanding into markets including Singapore and Japan. In keeping true to the food outlet’s philosophy of ease, convenience and customisation, Guzman y Gomez last year extended its payment options to include Apple Pay in its click-and-collect app. With its popular app now accounting for close to 10 per cent of all orders processed, digital wallets represent the next step in delivering a standout user experience.
For those already on the road to switching on digital wallets, there are three key points to consider:
1. Security and scale:Any data that is linked to a customer’s banking details and personal information demands the highest level of security. When selecting a technology partner, look for those that offer easy-to-integrate software development kits (SDKs) that support the full gamut of payment methods and currencies – not just the most popular ones. Encrypted tokens never touch your server, which means your payments are more secure, processed quicker, and feature updates and new payment options can be added as they arise. This way, your business minimises its liabilities, keeps customers safe, and always ensures that you’re running the latest technology.
2. Seamless user experiences: When it comes to mobile commerce conversions and payment processing, seconds can make a world of difference. Businesses need to make sure that its mobile wallet technology is fast and scalable. Features such as one-touch checkout can increase checkout conversion with less clicks and less screens.
3. Continuity between mobile and PC: There’s no longer such thing as a standalone, “mobile-first” strategy”. Customer experience is customer experience no matter the platform, ad as Apple and Google wallets expand into web browsers, consumers are drawn to the idea of using a single payment method both online and in-store. So, the last thing a business needs is a system that flip-flops between desktop and mobile.
The promise of digital wallets goes beyond introducing a new way to pay. It will reimagine what money can look like and make financial transactions faster while accelerating payments innovation for business. Meanwhile, transactions will become less expensive for consumers, democratising purchasing and payments for whole new customer segments. The technology is here, so why hesitate?
Carolyn Breeze is Head of Australia at Braintree. In her role, Carolyn is responsible for building lasting partnerships that drive and improve customer experiences in today’s digital commerce.