Digital wallets are fairly new to the U.S., but their use has increased as a result of Covid-19. According to Computer Weekly, “More than 60% of the world’s population will use digital wallets by 2026.” If you’re on the fence about incorporating digital wallets into your business, here’s what you need to know about the benefits of digital wallets.
What Are Digital Wallets?
Digital wallets are financial transaction applications allowing people to make payments using mobile devices. Digital wallets can also be used for online purchases and to transfer funds between friends and family. PayPal, Zelle, and Apple Pay are examples of digital wallets.
Benefits of Digital Wallets for Businesses
If you’ve ever used a digital wallet, you probably understand the benefits from a consumer’s point of view. Overall, digital wallets are easy to use, fast, and convenient for both the customer and the business. While most business owners understand that happy customers equal a better bottom line, let’s discuss the specific benefits digital wallets offer businesses.
Improved Checkout Speed
Digital wallets improve checkout speed because consumers don’t have to spend seconds opening their wallets and looking for their credit card to pay for something. Instead, they simply use their phone.
For online transactions, checkout is much easier because consumers don’t have to get up, find their wallets, find a credit card, type the numbers, etc. Instead, they use the app to complete their transaction with data already stored on their phone, and they complete their transaction in seconds.
While saving the customer seconds may not seem like it would significantly impact the bottom line, improved checkout speed creates goodwill because it reduces wait time and help customers feel at ease.
Increased Repeat Business
According to a survey by 451 Research, digital wallets increase customer frequency. Based on this, we can infer that consumers like convenience and reward companies that make things more convenient with their loyalty and business.
Whether it’s a conscious decision or not, consumers’ actions and habits often surround merchants that make the checkout process as close to friction-free as possible. Amazon is a great example, making payments easy with “one-click ordering.” This has made consumers’ habits shift to using Amazon as their merchant of choice even when they’re not the least expensive option.
Increased Conversion Rates
Businesses also benefit from higher conversion rates with digital wallets. This is because the checkout process is simple and easy. For example, when consumers type in their credit card numbers during an online checkout, it is time-consuming and leaves room for human error.
As a result, consumers go through the process only to get an error message because they typed the credit card number in wrong, and then they are so frustrated they no longer want the item they were about to purchase. On the other hand, when transactions are easy and seamless, more transactions will inevitably be completed.
Decreased Fraud
Digital wallets are more secure because they are password protected and/or use biometric data, like a fingerprint or face scan. Credit cards, on the other hand, are misplaced and can be copied. Because of the additional protection features that digital wallets have, they can help businesses to decrease fraud. Decreasing fraud creates more goodwill for a business, and saves time and resources that go toward dealing with fraudulent charges.
Decreased Chargebacks
Another benefit of decreased fraud is that it helps decrease chargebacks. Decreasing chargebacks saves time and money, but it also helps ensure a better rate from your credit card merchant provider because you are seen as a trusted merchant with fewer “red flags.”
The Bottom Line
Digital wallets are the future of doing business. They are faster, more convenient, and offer a more secure checkout for consumers. These benefits, in turn, lead to more goodwill, increased orders, higher conversion rates, and less fraud and chargebacks.
