The Effect of Digital Wallets
Quick Summary What Are Digital Wallets And What’s New About Them? A virtual wallet or a digital wallet is a relatively new term. It describes software that provides users with a virtual replacement for paper money. Such software is always protected and encrypted. Digital wallets contain information that allows it to access cash, credit card accounts and […]
What Are Digital Wallets And What’s New About Them?
A virtual wallet or a digital wallet is a relatively new term. It describes software that provides users with a virtual replacement for paper money. Such software is always protected and encrypted. Digital wallets contain information that allows it to access cash, credit card accounts and shipping details.
Why Should You Pay Attention To Virtual Wallets?
A digital wallet is different from an online payment system. An online payment system allows users to send and receive money online. It typically wouldn’t work in regular retail environment. Using an online payment system also usually requires taking a lot of steps such as entering name and password, entering the amounts manually and then going through a confirmation process.
Paypal is one of the largest online payments systems. It was founded in 1998. Google checkout was introduced in 2006 and replaced by Google Wallet in 2013. Because these systems have been around for so long, it’s easy to dismiss virtual wallets and changes that the technology is bringing.
With many of the digital wallets, such as Apple Pay, Venmo, Samsung Pay and Android Pay, users can make payments using their smartphones in all kinds of environments. Some of these include websites, apps and physical retail stores. They can often make payments with just a tap of a button, which is very different from having to log into a system and spend a few minutes entering and confirming information. For example, to pay for an item in a store that accepts Apple Pay, you need to enable Apple Pay on your iPhone and then hold your phone within one inch of the payment reader. You will need to place your finger on the Touch ID to confirm the transaction.
The Elephant In The Room: Amazon’s 1-Click Patent
All sellers want to make it easy to complete transactions. Obviously, there’s nothing easier than paying with just one click. However, there is an issue here that you need to know about. Amazon owns the “1-click trademark.” It also patented 1-click technology in 1999 and was able to successfully protect its rights to the technology (Wikipedia).
For example, in 1999 Amazon filed an infringement claim against Barnes and Noble and won. Apple started licensing 1-Click technology from Amazon in 2000 to be able to use it in iTunes. However, the expiration date for Amazon’s patent is September 12, 2017 (Quora), which means there will be a significant increase of websites using 1-click technology even if Amazon still keeps the trademark.
Virtual Wallet Trends
Most companies that offer virtual wallets do not disclose the number of users they have. However, they do report volume and growth figures. These numbers are staggering. For example, the volume of transactions processed with Apple Pay was 450% larger in the first quarter of 2017 compared to the first quarter of 2016 (Fortune). According to Business Insider, the volume of mobile in-store payments in the United States will grow more than 3 times between 2017 and 2020 (Fortune).
Changes That Virtual Wallets Bring To E-Commerce
As more and more people are using virtual wallets, you need to make sure that your e-commerce store is compatible with them. If it is not, you might lose money.
Because virtual wallets make it very easy to pay, you will get more customers if you are able to convince them to buy at that moment with the click of a button. This means that the gap between those who know what they are doing and are successful and those who can’t figure out why they are not making money will only be growing.
Finally, since virtual wallets contain a lot of information about customers, you will be able to analyze the behavior of your buyers better. This opens a lot of opportunities for predictive analytics and being able to plan more effectively.
High adoption rate of virtual wallets and staggering growth of the volumes of transactions prove that digital wallets are here to stay. With time they will be getting even more popular, which means that you need to make your systems compatible with the most popular digital wallet solutions in order to prosper in e-commerce business.