August 2, 2021

The Future Is Now for Digital Wallets

When they first hit the scene, digital wallets received a lukewarm welcome. Uptake was largely among a niche demographic of early adopters who liked the benefits and were comfortable with the new technology. Fast forward to the beginning of 2020, and we started to see digital wallets being used more often and by a much wider customer set. As digital wallets started picking up some steam, COVID-19 hit and massively disrupted the payments industry. Consumers were on the hunt for safe, contactless ways to pay, and digital wallets were right there waiting for them.

Consumers Want Seamless Experiences

We all want hassle-free ways to pay our bills because, let’s be honest, nobody likes paying them. With our cellphones rarely out of reach, many of us are choosing to use our phones to pay rather than cash or cards. This is largely due to the desire for truly seamless payment experiences. Consumers can use a digital wallet to pay for goods and services easily and securely using passive authentication, such as face or touch ID. With their credentials already loaded into the wallet, they can tap and go without entering additional credentials or providing further authentication. It’s these truly on-the-go payment experiences that consumers are increasingly prioritizing.1 In fact, global consumers are expected to make $1.1 trillion noncash payments by 2024 as they purchase goods and services using a mix of online, mobile, and connected devices.2

COVID-19 Has Changed the Way Your Customers Pay for Services

At the outset of the pandemic, consumers quickly sought new ways to pay to reduce face-to-face commerce and limit contact with payment devices. They flocked to digital wallets because they’re easy to use and there’s no physical contact required to make purchases. Our Customer Experience Report 2021 found that during the pandemic, 23% of consumers started using PayPal®, 18% started using Apple Pay®, and 13% started using Google Pay™. It was this change in behavior that dramatically accelerated the growth of contactless payments around the world. In the past year, digital wallet spending has become so popular that it has surpassed cash as the most popular payment method for in-store purchases.3 

Staying Ahead of Your Competition

When it comes to what triggers a consumer to try a new brand, price and convenience are still the top factors. Though, features such as giving customers the flexibility to pay how they want and speed are also becoming must-haves. A recent study indicates that mobile wallets and contactless payments are starting to inspire loyalty and foster engagement, with 85% of consumers saying it was important for businesses to accept these methods at checkout.

This data makes it clear that contactless payments are becoming a driving differentiator.4 When factors like price, selection, and location are equal, nearly two-thirds (63%) of consumers said they would switch to a new business that installed contactless payment options. With that in mind, if you do have digital payment options available, make sure you draw attention to them through an awareness campaign. This will help attract new customers and leave you better positioned for growth. If digital wallets haven’t really hit your radar yet, it is probably time to give them some serious thought. They may have been considered a nice-to-have or something that sets you apart from your competitors a few years ago, but they are quickly becoming a customer expectation.

Data Shows Trends Are Turning Into Habits

There are lots of studies indicating that these digital payments trends are sticking around. RTi Research reported that once the pandemic hit, 30% of responders used contactless payment methods for the first time, with 70% of those newer users indicating they will continue to use them after COVID-19 ends. Further still, 28% of consumers say that they would go to a different retailer if theirs didn’t offer contactless options.5 Juniper Research expects that the total spend through digital wallets will exceed $10 trillion in 2025, up from $5.5 trillion in 2020. It also confirmed that the 83% growth in spend will continue to be fueled by the digital payment habits consumers adopted during the pandemic. More generally, awareness of contactless methods has jumped 25% from 2019, with three-quarters of U.S. consumers now familiar with them.6 

Customers Want More Access to Digital Payments

Digital payments are not just popular with a select few anymore, which means if you’re focused on improving customer experience and satisfaction, you need to give your customers access to more digital payment options, like digital wallets. KUBRA can assist you in making this a reality with its industry-leading portfolio of digital payment options and its extensive group of payment partners. Learn more about how KUBRA can help here

Sources:

  1.  The Growing Importance of Invisible Payments and a Seamless Customer Experience,  MarketScale,  2020.
  2. Business Insider, The Payments Forecast Book 2019: Global Payments.
  3. Digital Wallets Eclipse Cash Globally at Point of Sale for First Time During Pandemic, FIS, 2021.
  4. The Visa Back to Business Study, Powering Recovery Through Digital and Contactless Payments Amidst COVID-19, Global Small Business and Consumer Insights, June 2020.
  5. Majority of Shoppers Emphasize Importance of Contactless Payment Options, Avoid Use of Cash According To New Inmar Intelligence Survey, StreetInsider.com, November 11, 2020.
  6. Deep Dive: Why Seamless Payments Are Key To Customer Engagement During The Pandemic, PYMNTS, 2020.