Posted On: 8/25/2017
Technology is changing way people conduct financial transactions every day. Mobile payments made through digital wallets are starting to take a more prominent role in the current retail-scape. There are estimates that one in every five Asian consumers utilize a digital wallet, and Business Insider projects $503 billion worth of mobile payments by 2020. Consumer, businesses, and more recently also banks are making this transition. This article examines some aspects why digital wallets have become popular in recent years.
Physical Wallet Alternative
One appeal of digital wallets is that they are able to substitute whatever the average person carries around in their physical wallet. Digital wallets allow users access to personal funds and also includes the user’s personal identification. For example, a digital wallet can provide the credentials needed to purchase alcohol, as it can verify the user’s name and birthdate.
Free to Get, Easy to Use
The ease of getting a digital wallet has also helped increase the popularity of the practice. After making a purchase at an e-commerce site, customers who don’t have a digital wallet can be prompted to sign up for one.
There are also several choices of digital wallets including Apple Pay, Samsung Pay, and Android Pay, which are exclusively mobile apps. There are also payment services like PayPal and Venmo that can be used through mobile and online.
Buying goods or services with a digital wallet allows a number of small perks. As mentioned, checkout is a lot quicker when buying online. Digital wallets can also be used in brick-and-mortar shops, and some of these physical locations use digital wallet companies themselves to integrate loyalty and coupon programs.
Another reason for the rise in popularity of digital wallets is that users are able to move funds between one another. Rather than sending someone a check or waiting to see someone in person to hand them cash, peer-to-peer transactions can be made quickly if both parties have a digital wallet. This payment method is growing increasingly popular as a tool for splitting payments such as restaurant checks or cab rides.
All the personal information entered when signing up for a digital wallet is encrypted. This means that merchants don’t see the user’s financial information. Instead, each transaction is given a unique token that’s used to identify it. This keeps pertinent information about the user’s financial accounts hidden.
Business can access funds received via digital wallet almost immediately, which is not always the case with credit card transactions. Businesses can also avoid the costs and fees associated with credit card transactions by encouraging their customers to make purchases with digital wallets.
Large retailers like Bloomingdales and Macy’s have started to accept Apple Pay, Samsung Pay, and Android Pay. Also, major banks, including Wells Fargo and Chase, have developed their own apps that allow customers to perform debit card-like services with their bank’s digital wallet.
Currently, users can access digital wallets from their wristwatch, and cryptocurrencies have added an extra layer to the concept by prompting its adopters to carry around a thumb drive containing their coins that’s independent of the internet. Wherever digital wallet technology continues to slope towards, it seems for now the trend is increasing without much sign of slowing down.