Digital Wallets Now Powering Nearly 30% Of Global In-Store Payments
Digital wallets are quickly becoming one of the most popular ways to make payments, with more than half of all global e-commerce transactions now being done through them. This trend was set in motion in 2011, when Google released a video on its YouTube channel promoting its new mobile payments service.
At the time, Google’s VP for Payments, Osama Bedier, announced that this was “just the beginning” of the digital wallet story. Today, digital wallets are used for nearly 30 percent of global in-store payments, with the leading wallets including those that come with your phone, such as ApplePay for iPhones and GooglePay for Android phones, as well as the likes of Paypal, Venmo and Cash Appl.
A Secure And Convenient Alternative To Traditional Payment Methods
Digital wallets offer a secure and convenient alternative to traditional payment methods. Thanks to tokenization, the wallet stores encrypted card details, meaning that when a payment is made the data remains secure. This is far easier than having to manually enter all the payment details online or rummaging around for a credit card.
Merchants are also reaping the rewards, with consumers completing transactions far more often when they use a digital wallet compared to those without. The technology may be complex, but its advantages are simple.
J.P. Morgan Chase’s Global Head Integrated Payments Group Managing Director Sanjay Saraf believes that digital wallets are a major step towards an omnichannel experience, allowing seamless payments on any platform. However, he acknowledges that the biggest challenge lies in-store. But, as Android and Apple have now introduced ‘tap-on-phone’ payments, merchants can now use mobile phones as contactless payment terminals, without additional hardware. This has created a new wave of payment possibilities – from restaurants to clothing stores where staff can carry small, handheld devices and the checkout counter is no longer the only option.
As digital wallets continue to evolve, they play a key role in transforming our lives. E-commerce is no exception, with digital marketplaces such as Amazon, eBay, and Etsy leading the way. Traditional companies are now following suit, creating their own marketplaces, like Siemens’ Digital Exchange.
To make it easier to distribute funds to a large number of sellers, these marketplaces are offering seller wallets, digital wallets that operate in the opposite direction of consumer digital wallets. These seller wallets provide a simple, convenient way for sellers to get paid, making them a key component of the marketplace ecosystem.
Looking to the future, digital wallets are likely to be at the heart of innovations such as payments and the Internet of Things, as well as digital identity.
“Wallets are not just useful for payments but also for identity.” “And if we can use a wallet not only to identify ourselves but also to let devices identify each other, then a whole lot more things become possible.”
Henk Kuipers, Innovator at Rabobank
What Is Digital Identity And Why Does It Matter?
Legislators around the world have long been invested in the concept of digital ID wallets as a way to provide citizens access to public services and prove their identity when onboarding to private service providers. The US, Canada, Europe, Australia and New Zealand are all actively pursuing the development of digital identities, with the aim of making them more widely accessible.
Digital identities have become essential in our digital lives. From logging into our bank accounts to verifying our identity to machines, we are constantly proving our identity to various sources. In 1999, Finland was the first country to introduce a chip-enabled electronic identity card. Now, the average American spends more than five hours on their phone each day, constantly proving their identity.
Thales, a French group providing data security services to 30,000 institutions, defines digital identity as “a set of validated digital attributes and credentials for the digital world, similar to a person’s [real-world] identity.”
Digital identity is no longer just a matter of perception; it is an essential part of our digital lives and as digital wallets become more commonplace, they’ll be used to prove our identity in a variety of contexts – from opening a bank account to booking a hotel room or renting a car. Experts are confident that this technology will soon become an integral part of our everyday lives.
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