Digital wallets effectively replace the need for physical payment cards and are in one of their roles data keepers which store the needed information for making a purchase and identifying the user. They can be used to support both desktop use cases and mobile-only use cases. Wallets keep bank/card details private, therefore offering a high level of convenience but increased security for shoppers, too. The advantages are also mirrored in the merchants and PSPs since their business benefits from the increased conversion due to simplified purchases. Wallets offer an easy way for shoppers to identify themselves during transactions, using biometric methods such as fingerprint or Face ID or by password on mobile and via QR code on desktop.
However, fraud has always been a concern. Now, especially under the European PSD2 regulations, stringent security measures are integrated into the best wallet products, such as data encryption, transaction risk analysis, and Strong Customer Authentication, ensuring the best possible security.
Unlike a digital wallet, mobile wallets work only on smart mobile devices, but the increase in their usage is widely obvious and goes hand in hand with the growth of digital wallets.
"Mobile Payment is the next generation of contactless payment. Using biometric methods to ensure security on one's device makes smartphones more user-friendly than contactless cards – not to mention better hygiene. Most customers today take it for granted that their bank offers them mobile payment"
The coronavirus crisis has triggered a strong push for digital payments. Contactless cards as well as mobile payment solutions benefit from this. Even before Corona, the number of Apple Pay users worldwide increased by more than 50 percent from September 2018 to September 2019 to a total of 441 million. Reason enough for every issuer to take a close look at their mobile payment strategy. The time of cash is ending. It seems like today’s customers of mobile wallets can be recognized in different audiences, no matter their age, status, the job they do, or the life they live.
The management consultancy PricewaterhouseCoopers (pwc) sees six overriding trends that will determine the future of payments, among others the use of digital wallets. The consultancy company expects mobile payment methods to grow by around 23 percent annually by 2024. Acceptance of wallets will be driven by QR codes and open banking, among other things. Simplicity and convenience mean that digital wallets will become the preferred point of contact, replacing previous banking interfaces and cards. The initiation of payments will also move away from cards and accounts to digital wallets. Of all payment methods at the POS, the FIS Worldpay Global Payment Report states that the greatest growth opportunities lie with mobile wallets and BNPL (Buy Now Pay Later, e.g. payment on account or installment purchase).
The decisive question might be how payments via a digital wallet or BNPL procedures will be set up or built upon in the future. i.e. will the means of payment in the background be a card or an account?
Digital wallets are among the most popular online payment methods in Europe. With e-commerce and m-commerce booming, e-wallets offer a convenient, fast and secure way to pay for purchases and leverage value added services like loyalty, gift cards, or storing of transportation tickets, all in one platform.
The European market has been cautiously adopting this option in comparison to the Asian and US markets, but users are steadily on the rise. Compared with regions such as Asia and North America, the use of e-wallets is still modest in Europe. However, it has been taking off in recent years, with the market for e-wallet solutions growing by 37.1% in 2020. An increased preference for online shopping, mobile-first purchasing, and contactless payment means that the potential for the growth of wallet solutions is here to stay. According to global technology intelligence firm ABI Research, the worldwide mobile wallet market will increase from a circulation of 3.5 billion in 2022 to over 5.6 billion in 2027. Similar assumptions are seen by Juniper Research, where the total number of digital wallet users will exceed 5.2 billion globally in 2026, up from 3.4 billion in 2022. It is expected that $12 trillion will be spent annually through electronic wallets by this time.
The “best-in-class customer experience” is something that everyone in the digital payments and banking arena aims to achieve. The Mobile Wallet extends the customer relationship beyond mobile contactless payments. It enables tap to pay for mobile devices based on the leading international card payment systems. The integration into the existing banking app – where cardholders already check their account balance and transactions – gives them the security to try new payment functions and pay with their phone faster without taking out their physical wallet.
Big tech entities such as Apple, Google or Samsung are dominating customer digital interfaces and banks are losing direct contact with their customers. To avoid this, banks must be able to react dynamically to changes in competition. Banks and issuers should strive to maximize digital customer touchpoints to remain present in the brand perception of consumers.
Customers expect more functionalities from mobile banking apps than account balance inquiries and transfer options. From the customer's point of view, for example, features for controlling payments, card management, or mobile payment are particularly interesting.
The technical basis for all modern types of mobile payment is tokenization. This involves replacing the original card number with another number (token). This token is then stored in the wallet on the smartphone. This automatically leads to the expected security and low fraud rates. The easy customer identification or paying just with a few clicks brings higher conversion.
By providing payment solutions to everyday problems, banks will be able to strengthen relationship with clients and ensure better customer retention. An experienced software partner like Netcetera allows banks to outsource the necessary work to build and maintain a secure and appealing mobile channel for their customers. They will be able to serve the needs of different customers and this in return will differentiate them from emerging FinTech competitors. Personalization is crucial to ensure what is on offer to each customer feels relevant and useful. How super wallets can turn banks into digital stars?” by G+D
This means that banks must strengthen their market position by incorporating value-added services into their mobile offering. With a modular app platform, services, such as in-app shopping possibilities, cash-back solutions, financial literacy tools, digital receipts, and personal financial management, can be integrated in no time and with minimal effort.
In 2022, the Netcetera ToPay white-label Mobile Wallet solution was acknowledged as the Impact Award Winner for the best Digital Wallet solution by the US-based Aite Novarica Group.
As a white-label provider, Netcetera is an expert in expanding a bank’s portfolio and improving the customer experience. The company’s solution enables the banks to keep overall control over the app with strong branding options. Its highly modular solution is flexible and configurable with respect to specific requirements of issuers, merchants, payment service providers, and card networks.
The products guarantee security and a seamless flow, something all customers look for to achieve a better digital experience. The company enables customers to enroll in Click to Pay (CtP) securely and easily directly from the issuer app with its ToPay Mobile Wallet and Click to Pay Push Provisioning. This enables Secure Remote Commerce (SRC) for issuers and their customers globally. CtP Push Provisioning is an easy way to add every payment card to the CtP wallet.
You can always contact Netcetera experts for more information in regards to wallet payment solutions.