Can You Increase Sales Through Digital Wallet Acceptance?

There are many things that play into the success of any business. But at the end of the day, success hinges on the ability to accept a payment for the goods and services one is peddling. And not being able to accept the consumer's preferred payment method will undoubtedly stifle your path to success.

In this day and age, can merchants even operate in a world where they don't consider accepting mobile and digital payments as part of their business strategy?

If you look at the connection between smartphone penetration, mobile commerce, digital payments advancement, and consumer demand, the answer is no.

There are more smartphone users than ever before.

Even as recently as a decade ago, owning a smartphone wasn't exactly commonplace. It's true that most people owned a cellular phone in the late 2000s, just not smartphones. Smartphones were reserved for businessmen. Their relatively high cost created a significant barrier to entry for most consumers. And most people didn't have the need to check their email on the way to the grocery store.

But over the years, smartphone brands have grown and they've become much more affordable. This has made owning a smartphone much more accessible for the general population. Now 85% of Americans own a smartphone. And they’ve become such an integral part of our everyday life experience, most can't imagine living without them.

Increases in global smartphone ownership led to the eCommerce revolution

A significant increase in smartphone ownership globally has directly led to the substantial increase in mobile commerce we’ve seen in recent years. There’s no denying that merchants of all sizes must develop a marketing strategy that focuses on mobile marketing. But, mobile marketing isn't enough. Merchants must extend that strategy to focus on mobile payment acceptance that caters to the customer experience.

More web traffic initiates from smartphones than from any other device

“Perhaps the most notable trend in the world of ecommerce is the unprecedented use of mobile devices. In Q3 2020, smartphones accounted for over 50% of global website traffic.” This underpins the importance for merchants to have websites that are optimized for mobile. 

However, that doesn't necessarily transmit into sales, as revealed in the newest Sale Cycle 2021 Ecommerce Stats & Trends Report. Shopping cart abandonment is much greater on mobile devices than on home computers. Consumers are browsing, researching, and placing items in their cart during mobile shopping sessions. This shows clear intent to buy, but there’s a clear disconnect when it comes to the purchase.

Mobile and digital wallet users have grown year over year

According to Marqeta’s 2020 State of Payments Report, mobile wallet use in general increased 68% in 2020. Consumers from all generations are adopting mobile wallets as a preferred payment method. Since 2019, the percent of consumers using mobile wallets has more than doubled in all ages over 35. In Consumers ages 35-50, 80% use mobile wallets to pay. And in older consumers ages 51-64, 45% now pay through mobile wallets.

More importantly, 9 out of 10 consumers plan to continue to use mobile wallet payments in the future. This is mainly due to the convenience of paying with digital payments. 92% of consumers polled felt mobile wallets were an “easy and convenient way to pay”. That’s huge when compared to 2019 when only 55% of consumers felt that way. 

Health and safety may have driven consumers to adopt mobile and digital wallet payments, but it's the convenience that keeps them using them.

How smartphones and mobile wallet use come into play in the future of commerce

It's true that 85% of Americans, across all ages, now have smartphones. But when you look at stats for Americans ages 18-26, that number increases to 96%. Millennials and Gen Z will continue to be large drivers of mobile shopping and digital wallet use. These younger generations are growing up in a digital age, and therefore are more comfortable performing all kinds of transactions over digital devices. 

It's not hard to see that this trend will continue until it is no longer considered a trend, but simply a part of modern life. There’s no doubt that mobile wallet payments will continue to gain popularity with consumers. But can merchants capitalize on digital wallet use to increase revenue?

Whether through increasing online sales conversions, customer retention, or reducing costs to increase profitability, the answer is yes.

Cash is costly

At brick and mortar retail, mobile wallet acceptance reduces cash transactions and enhances the customer experience.

Most people don't realize it, but cash is more expensive than you think. There is a great amount of manual labor involved in dealing with cash as a business. Money must be stored securely, counted and accounted for, transported and deposited. The costs can really add up for merchants. As we move towards a more cashless society, merchants can reduce the amount of resources dedicated to handling and securing cash. While accepting card transactions do come with expenses, handling cash does nothing to increase efficiency. And when business processes become more efficient, merchants realize greater productivity and profitability in their business.

Faster transactions

If customers had a mantra, it would be “need for speed”. And digital wallet transactions provide just that without sacrificing security. Debit card and credit card transactions can take several seconds to process. And they often require the customer to enter a PIN code or provide a signature to complete the transaction. Mobile wallets, on the other hand, process transactions almost instantly with no further action. Just a quick tap or wave near the NFC terminal, and bing, the transaction is approved.

Not only does this help merchants improve checkout line times, but it's an important part of improving the customer experience. 

Enhance the customer experience 

Ultimately, consumers want a convenient and pleasant customer experience. They want to be able to pay with their most preferred method. In order for their transaction to be convenient, they have to be able to pay the way they want to. And when they can pay whatever way they want, it reduces friction at the checkout.

Absolutely, merchants that don't offer digital wallet payments are missing out on sales. 60% of consumers admit that if they can't pay with their preferred method, they will abandon the purchase. Even in a physical store. 

Merchants are beginning to understand and capitalize on the role that payment technology plays in customer acquisition and retention.

Reduce mCommerce shopping cart abandonment

Due to the sheer amount of mobile web traffic, merchants know thier sites must be optimized for mobile. But how many merchants extend that attention to detail to the checkout process?

Stats tell us that consumers are choosing to shop and research items on their mobile devices. Yet there is a clear disparity between mobile traffic and mobile sales. Conversion rates are lagging despite consumers' clear intent to purchase. 

If 50% of all website traffic comes from mobile devices, but cart abandonment is greater, merchants must consider the correlation between shopping and purchasing.

The most common reason for shopping cart abandonment, regardless of device, is friction at checkout. And more carts are abandoned during mobile shopping than on computers. The reason for this is both a lack of trust in payment security and a clunky checkout process.

Merchants must consider how consumers are using devices to shop. Entering card payment data while on a device on the go must be a smooth experience. Employing digital wallet technology on ecommerce sites helps to relieve that friction. Digital wallets allow consumers to easily, and securely, pay with stored payment information on their phone. No pulling out a physical card, fumbling around typing a lot of numbers and dates. 

Merchants have a clear opportunity to capture more online sales. Yes, optimize for mobile. But the focus must move toward improving the mobile online checkout experience. Accepting mobile and digital wallets must be an integral part of an omni-commerce Payment Processing strategy. Once merchants address the issues causing cart abandonment during mobile shopping, they’ll capture a greater share of conversions. 

Merchants must build trust and expand payment options to reduce friction during mobile checkout. This way, online sales conversions more accurately meet mobile traffic growth.

Digital payment technology continues to advance. And with it, consumer payment preferences are changing. To meet consumer demand for more options and flexibility, merchants must expand payment methods to include digital innovations.

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