What’s the one item that everyone seems to have with them at all times? It’s their smartphone.
Smartphones allow us to communicate, learn, read, shop and be endlessly entertained. Smartphones deliver all this value in a device that’s easy to use, affordable to most and fits neatly in our pockets.
So it makes sense that smartphones are taking on more everyday activities, like paying for goods and services. Mobile wallets turn smartphones into powerful, convenient and secure payment tools. In less than a decade, mobile wallets have emerged as the payment method of choice for millions of shoppers around the world.
Mobile wallets are changing the face of retail payments, so it’s a great time to get caught up. This quick guide answers the questions business owners and managers like you are asking about mobile wallets.
What’s a mobile wallet?
A mobile wallet is a smartphone app that offers a secure place to store digital valuables for convenient use on-the-go. Mobile wallets store digital versions of the same things we store in physical wallets, like credit and debit cards, airline boarding passes, concert tickets, and rewards cards.
Mobile wallets are also known as digital wallets or eWallets and that can cause some confusion. Though the terminology and individual features may differ, mobile wallet, digital wallet and eWallet all refer to smartphone apps that, among other uses, can act as a payment method. The term mobile wallet is sometimes applied to the use of smartphone apps for payment in-store while digital wallet is used more commonly for the use of the same apps to purchase goods and services online.
The most well-known mobile wallets are intended for general use and are broadly accepted by businesses large and small. These include digital wallets like Apple Pay, Samsung Pay and Google Pay. Other mobile wallets are closed loop and intended for use at one company, like many of the popular mobile apps offered by a growing list of popular quick-serve restaurant franchises.
How do mobile wallets work with payments?
Mobile wallets are smartphone apps that work like an updated version of a traditional payment card. Instead of swiping or dipping their cards into a terminal, consumers pay by simply tapping their smartphone at a properly-equipped point of sale terminal.
While additional security is built-in to the app, many mobile wallets also integrate a traditional PIN security layer. Then the transaction is designed to proceed as if a traditional payment card was used.
Mobile wallet smartphone apps are backed by traditional credit and debit card accounts. Beyond the differences in how a consumer’s payment information is captured at the point of sale, credit and debit transactions are processed as if a traditional payment card was used. Alternative payment methods and funding sources are also emerging as mobile wallet payment options.
Are mobile wallets safe and secure?
Mobile wallets are reliable, convenient and they are also safe and secure. The mobile wallets use secure technologies like encryption and tokenization to protect sensitive payment data. Mobile wallets build on the successes of .
Mobile wallets use secure technologies like so customers can tap their phones rather than swiping or dipping a card. QR codes make the secure exchange of tokenized payment credentials easy even for merchants who maintain a low-tech profile. Each of these wireless technologies create secure connections between smartphones and point of sale systems.
Mobile wallets benefit from additional layers of security compared to plastic, starting with a smartphone’s built-in biometric security.
How many people use mobile wallets?
A December 2018, projects nearly a billion people worldwide (938 million) will make a smartphone payment in 2019. That represents 36% of global smartphone users, a 13.5% increase over 2018. Mobile wallet use is higher in Asia and especially . More than 4-in-5 smartphone owners in China used a mobile payment app like WeChat Pay or Alipay in 2018.
Mobile wallet adoption is growing in the US, too, though at a slower pace. that 27.4% of US smartphone users will use an app on their device to make a payment in 2019. Worldpay’s found that eWallets accounted for 3% of US in-store spend in 2018. That figure is projected to more than double to 7% by 2022.
Are mobile wallets used online and in-store?
Many all-purpose mobile wallets—like Apple Pay, Google Pay, and Amazon Pay—can be used to pay for goods and services online, in-app and in-store. Mobile commerce is expanding dramatically, driven in part by payment methods that are also smartphone-native.
Mobile wallets are a popular online payment method as they’re both safe and convenient. Mobile wallets also help reduce shopping cart abandonment and increase conversions. eCommerce platform provider that sites that encourage digital wallets for payment saw upwards of a 3x rise in mobile cart conversion.
Is the US behind in adopting mobile wallets?
in 2019, the US ranked sixth globally in mobile wallet penetration, with 27.4% penetration (versus 81.4% in China, the global leaders). Why? To put it simply: habit. Engrained habits are hard to break when built over decades.
But the tide is definitely turning as consumers discover the ease, convenience and greater security of mobile wallets. Worldpay’s found that 66% of US consumers believed that smartphones would replace credit and debit cards as the main payment method within the next five years.
Are we finally approaching a in mobile wallet adoption? Mobile payments are finding critical mass in , and , exposing the technology’s ease to millions. The more people try them the more likely they’ll eventually overtake habit—especially when the convenience advantage is overwhelming.
Why should my business accept mobile wallets?
Accepting mobile wallet payments offers three clear benefits for small businesses:
Accepting mobile wallets is convenient. With a smartphone we don’t need to carry around encyclopedias to look up information. Why would we carry around a plastic payment card if that information was securely stored on your device for easy use?
Accepting mobile wallets is secure. Security and data privacy is understandably more important than ever to consumers. Payment fraud remains a serious concern for everyone in the payment ecosystem: consumers, businesses, financial institutions, and the payment partners that serve them.
Accepting mobile payments is easy. Mobile wallet acceptance is built into the majority of point of sale systems, from newer to integrated . You can even accept payment from a mobile wallet with a mobile device of your own. Accepting mobile wallets is easy to set up and requires minimal training for your staff.
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