What is a Digital Wallet?
A digital wallet (or e-wallet) is a software-based system that securely stores users' payment information and passwords for numerous payment methods and websites. By using a digital wallet, consumers can make safe transactions without using cash.
- A major benefit of using a digital wallet is added convenience for your customers. Digital wallets largely eliminate the need to carry a physical wallet by storing all of a consumer's payment information securely and compactly.
- Digital wallets offer another option to pay when shopping online (think PayPal) or at the gas station using their phone (think Apple Pay).
- Retain customers by offering perks. Some digital wallets not only afford ease of use, but also offer customers rewards for using them. For instance, the Starbucks pay app, Target's Wallet and Amazon Pay are digital wallets that offer perks like loyalty points and coupons.
- Digital wallets are a potential benefit to businesses that collect consumer data. The more companies know about their customers' purchasing habits, the more effectively they can market to them. The downside for consumers can be a loss of privacy.
Types of digital wallets to offer your customers
- Apple Pay is a digital wallet exclusively for iPhone or Apple Watch users. It allows you to process transactions both in-store and online. In-store, customers simply need to verify their identity using their smartphone's pin number or Face ID, then hold their device near a compatible POS system to complete the transaction. One of the main advantages of Apple Pay is the ease of experience, allowing customers to make payments seamlessly and securely.
- Originated in the US in 2015, Google Pay authorizes users to make payments from Android devices by powering in-app and tap-to-purchases in mobile devices. Google Pay offers a faster and secure way to pay and enables simplified checkout in apps, web and across Google. To use Google Pay to pay in stores, Android phone, watch, or tablet is a mandate. Google Pay is now available in 28 countries.
- PayPal is one of the oldest, and most widely used, digital wallets. It’s been used to make payments online and transfer funds between other parties with relative ease. Paypal is available for both Android and iOS users. PayPal has stepped up its game after signing agreements with Mastercard and card processor First Data. This allows customers to have the option of paying with the PayPal app, which is the same process as tap-to-pay options like Apple Pay, or swiping a PayPal Mastercard to make purchases in-store.
...Not to be confused with Mobile Wallets
Mobile wallets should not be confused with digital wallets. Though mobile wallets are often called digital wallets, there is a key difference: A mobile wallet is an app that is stored on a smartphone, while a digital wallet can be found on a desktop, laptop and a mobile device.