The digital wallet sector is one of the fastest growing in the world. According to tech research firm CB Insightscurrent global value is growing expected from $1B to more than $7B in 2027. But what exactly are digital wallets, and what do you as an e-commerce entrepreneur need to know about them?
What are digital wallets?
You can also store concert tickets, customer cards, vouchers and gift vouchers there.
Europe has big plans to introduce digital versions of identity cards and health statements, but for now, digital wallets are mainly about payments.
How does a digital wallet work?
If you use your digital wallet yourself, the payment is initiated via Magnetic Secure Transmission (MST) or Near Field Communication (NFC). Apple and Android use NFC, Samsung devices use both. Scan a QR code to initiate a payment can also, but is much less common than NFC.
For online purchases, the process is more or less the same as entering your credit card information manually, except it’s faster because all the data is already saved. Usually, you only need to provide your biometric data, such as a fingerprint or facial scan, via your smartphone to authorize the transaction.
By removing this friction from the checkout, you can act as e-commerce business boost your conversion.
Are digital wallets safe?
Yes, digital wallets are very secure. Most digital wallets use tokenization, which means that each transaction generates a random token that validates the transaction. A token is a 15 or 16 digit number that is sent in place of your card’s actual data.
To confirm a transaction, a biometric data is usually required, for example a fingerprint, face scan, iris scan or voice match.
Fraud, if any, is usually on the human side of technology. For example, because someone shares their password, buys something on a fraudulent website, or is careless with card details.
Which digital wallets are popular in Europe?
Europe has two main types: device-based digital wallets (Apple Pay and PayPal OneTouch) and third-party digital wallets tied to the customer’s country of residence (iDEAL, Klarna, Bancontact, Poste Pay, Payconiq, Paylib, Paydirekt).
For example, Apple Pay is used by customers throughout Europe, but only customers with a Dutch bank account or credit card can use iDEAL.
What are super wallets?
The extreme fragmentation of the digital wallet market, government interest in digital forms of identification and the rapidly growing consumer interest in mobile payments mean that the market is ripe for the super wallet. That is one digital place where payments, insurance, identity data, health data, investments and cryptocurrencies come together.
According to CB Insights this development is already going on in Asia, where payment apps offer meals, taxis, hotels, investments, insurance and games all in one app. At the moment, AliPay and WeChat are the big players.
Super wallets are also coming to the European market. Both established and new players all offer products in one place that includes savings accounts, BNPL, short-term loans, crypto trading and invoice management tools. Some even apply for their own banking license.
What you need to know about digital wallets and e-commerce
If you only have an online store, then you don’t need to know much about digital wallets. From 2022, your payment partner will probably already offer the possibility to integrate well-known providers such as Apple Pay, Mastercard and Visa, in addition to the country-specific platforms for the country in which you sell.
Because it costs nothing to offer different payment methods, except for some time to set everything up, it is worth choosing the widest possible range.
Développez votre activité avec Mollie
With Mollie you can easily offer all your European customers their favorite payment option. That can mean the difference between conversions and dropouts. Find out which digital wallets and méthodes de paiement Mollie supports.