Mobile payments have been quickly evolving, with more recognizable brands stepping into the industry to advance technology and offer what consumers and businesses want in terms of apps and services that allow them to pay with their phones. Digital wallets provide a secure and convenient way for merchants to interact and transact with their customer’s overall sales channels, both online and offline.
Digital wallets also provide value to retail financial institutions by increasing the connection between the customer and financial institution, resulting in increased transaction volume for their payment cards and ensuring higher customer retention.
Mobile and digital wallets also provide opportunities for financial institutions to improve and deepen their customer relationships. The evolutionary path for all wallet technologies will be driven by the desire to reduce friction in the transaction to minimize cart abandonment and optimize customer satisfaction.
E-payments originated in the 1990s, with the Stanford Credit Union as the first financial institution which offered online banking. As technology improved, e-payments became more secure and efficient, resulting in a growth in popularity. E-payments were sought as convenient as they were instant and quick, reducing transfer costs and time in-between transfers. Moreover, for businesses, e-payments reduce the risk of receiving fake bills. Consequently, e-payments became widely adopted, with additional e-commerce sites such as eBay and Amazon requiring them.
Digital wallets are finally gaining huge traction among consumers. According to a report by Zion Market Research, the global mobile wallet market value will reach $3.1 billion by 2022 with an annual growth rate of 32%, year over year. Last year, 54% of consumers used mobile wallets embedded in their smartphones through apps such as Apple Wallet, Android, and Samsung Pay, and that number will only grow.
But what’s even more interesting is that more than half of those consumers expressed a desire to use their mobile wallets for functions other than payment. Things like digital loyalty cards, coupons, order delivery updates, boarding passes, ID cards, event tickets and even reminders about coupon expiration and loyalty card balances are all native elements of the mobile wallet ecosystem.
Consumers forgetting their cards or forgetting that they even signed up in the first place. Marketers can now remind consumers that they have a payment system embedded in the one item they never forget. With mobile payment technology, you’re a single push notification away from creating the next digital touchstone directly with consumers.
Types of mobile payments
There are three types of mobile options. Commerce payment options are where customers open an internet browser, add items to the cart, order, receive their goods or services and are provided with a receipt. With payments, customers use contactless/mobile technologies, where payment information is stored on their device and they enter a PIN to complete a transaction. Finally, mobile wallets are looking to replace your current wallet by storing all your payment information.
There are other types of options available within these types of mobile payments. For example, with mobile apps, payments will occur on a consumer’s device in order to purchase goods from a specific retailer, such as the Starbucks mobile app, and data is stored on the device. Mobile POS takes place on a merchant’s device, but data is not stored. Online payment services occur on a consumer’s device, such as PayPal, for purchasing goods. Mobile P2P transfers, such as Venmo, also occur on a consumer’s device for bank transfers.
Social media and messaging apps have also joined the fun. You’ll be able to make purchases directly from social media apps like Facebook and use WhatsApp has a commerce channel. Social networks are “the” way customers are obtaining information from companies and using it to decide what product to purchase. If we were to transpose that into a mobile handset, a retailer can analyze and understand consumers through their consumption of social media to make changes in brand and marketing. Less prosaically, integrating social media with one’s purchase journey can help increase visibility, interaction and engagement, not to mention, add a “fun” element to the entire process.
The future of E-payments
As society continues to become technology-dependent, more and more users will begin to use forms of online payments more frequently. Mobile technology, in the form of phones, tablets, and notebooks, is making our lives better than ever before. It does this in many ways, not the least of which is making communications routine. We can be in touch with those we need to reach, whether work-related or personal in nature. On a less profound note, we can do simple things like pay for parking at meters with our phones. We can find out which bus we need to take and where to find it. We can accurately find places we need to be even when we have no idea where they are. We can explore new places and find new things that interest us with little effort.
Apps are so prominent in today’s society it would seem strange to live without them. I believe we will continue to rely on them as they become more powerful and delve further into different areas of our lives. Perhaps in the future, we will have only a few super apps, the apps industry might be owned by a few large companies, we can’t say yet. However I think we may be seeing less fantastic individual apps and more amazing all in ones that evolve over time.
Customers have changed. Companies should too. In the good old days, a customer used to walk into a store, select a product, purchase it and walk out. Today, the rules of the game have changed, because the game itself has become so complex. Before walking into a store, the modern customer researches a product they are interested in, they view videos pertaining to the same, compare prices, download coupons, the list is endless. In this context, therefore, a company can “re-imagine” a potential customer’s purchase journey with the help of mobile-based tools that are context-aware, socially driven, powered by technology, personalized and, most importantly, secure.