Merchants Must Embrace Contactless Digital Payments And Mobile Wallets

For retail merchants to continue to thrive, digital wallet readiness is foundational.

Mobile wallets are emerging as a key technology in the transition to digitally dominated payments. Physical cash is being left behind in recent scans of consumer behavior. Merchants must rethink their Payment Processing practices and expand digital payment options. By allowing consumers to pay seamlessly and conveniently from their phones, these technologies have been driving the transition from cash payments to more secure digital transactions.

A recent Visa study revealed two-thirds of consumers are switching to businesses with faster contactless payment options since 2020. This boom was fueled mainly by the rising fear among customers over health and safety. 

The use of Mobile wallets continues to grow worldwide, thanks to the popularity of digitally dominated payment solutions. A Global Market Insights report indicates that the mobile wallet market will close in on $700 million by 2027, foreshadowing a future that's looking digital.

In 2020, there were 2.8 billion mobile wallet users worldwide. That number is expected to jump 74% to 4.8 billion by 2025. This growth is attributed to two things. Greater penetration of smartphone ownership and the COVID -19 pandemic. 

Smartphone ownership continues to grow worldwide. Once thought of as a luxury item, smartphones now have a global penetration rate of more than 78%. The number of smartphone users grew by nearly 100 million over the past year. And in North America alone, that number is projected to jump by 50%. Mobile devices have now become an intrinsic part of modern life, necessary for even the simplest of day-to-day operations.

As merchants continue to embrace and adopt this technology as a part of their payment system, they will reap the benefits of increased customer loyalty and higher conversion rates. 

COVID-19 becomes the catalyst for widespread adoption of mobile wallets

In spite of this being nearly a decade-old technology, contactless digital payments have met challenges to its adoption in past years. However, the recent upsurge in concern over close contact with devices and people caused consumers to rethink their options. The desire to conduct business while also remaining touchless and respecting distances directly led to the need and demand for contactless digital payment options.

There's no doubt COVID-19 fast tracked mobile wallet adoption in the U.S. But it has also emerged as a major driver of digital payments innovations all around. Current trends point to mobile wallet technology as a driving factor for the next wave of payments innovation. And mobile wallets will continue to emerge as a key breakthrough technology in the transition to digitally dominated payments.

Currently, mobile wallets are experiencing a compound annual growth of 23% exposure. Because of this, we can expect mobile payments to account for a third of all payments in 2022. This exposure is expected to position the mobile wallet as a key breakthrough technology in the transition to digitally dominated payments.

Not only that, but mobile wallet technology also fuels non-traditional digital payment methods.

The transition to digitally dominated payments has also driven higher consumer demands for non-traditional methods that are also varied. These include QR payments, payment links and digital wallets that act as an extension of the online shopping experience. They will drive considerable value for both merchants and consumers across the globe.

QR code payment technology gains momentum

The U.S. has joined leading countries with a renewed interest in QR code payment technology. 

QR code payments have garnered greater widespread adoption by consumers and businesses than ever before. So much so that QR code payments are becoming a core functionality in mobile wallet payments. And it's not just technology giants like Google and Apple adopting QR codes. Merchants of all shapes and sizes have begun to see the value and power of QR code-powered digital payments. 

Customers will continue to urge merchants everywhere to implement innovative touch-free payment options for a more secure shopping experience in physical stores. Contactless digital payments option must become an area of focus for them.

Consumer demand for digital payments remains long after COVID.

Use of Mobile wallets such as Apple Pay and Google Pay will continue to grow due to their convenience and simplicity. Consumers are becoming accustomed to the value of digital payments of all types. Stored value wallets have been instrumental in bringing billions of new consumers into e-commerce. These types of mobile wallets have lowered the barrier for the unbanked and under-credited to enter the digital payments age. 

The promising technology is driving the growth of mobile money with its potential for highly secure transactions.

As Digital mobile wallet payments gain popularity, merchants must be ready. According to Visa, over 60% of consumers would switch to a business that offers contactless payment options. Nearly half said they’d stop shopping at stores that only offer cashier or shared machine-led transactions. Mobile wallets became the most sought-after POS payment approach in 2020, according to Visa's research.

Digital payment options offer an easier payment flow for both customers and merchants, providing a frictionless customer experience.

Merchants must expand digital payment options to thrive 

The payments industry is going through a revolution. And going cashless is just a part of it. Consumers are a driving force in the evolution of payment processing. They want fast and frictionless transactions. They also expect contactless and convenient payment options that suit their varying needs. But payment processors and businesses are also striving to evolve their payment processing practices to better suit commerce. 

Contactless payments and digital wallets have emerged to be one of the few industries that weathered COVID-19. Mobile/digital wallet technology has changed the way we interact with society, and they’ve become essential for day-to-day operations.

Millennials, currently the largest mass of consumers, are the major drivers of digital payments adoption. Not only are they the biggest users of mobile wallets, 64% believe mobile wallets make purchasing easier.

And if you think shopping cart abandonment is reserved only for eCommerce, think again. The same survey revealed that a full 41% of consumers have abandoned a cart full of goods in a physical store due to lack of digital payment options. Furthermore, 41% also said that they plan to solely use digital methods for payments within the next two years. Or they're already cashless.

This just serves as proof that brick and mortar and eCommerce alike must focus on growing digital payment acceptance.

With a digital payments future leaning towards mobile wallets, e-wallets are poised to be a key technology in the payments industry. Visa Back to Basics Study revealed that 73% of SMBs surveyed felt that adopting “new forms of digital payments is fundamental to growth”.

As consumers shift their preferences for digital payment options, merchants must be poised to meet those demands. Merchants must keep up with the needs of their customers by offering them easy and convenient mobile wallet options if they want to stay competitive.

Is your business mobile-ready? Have you expanded your digital payment options to meet consumer demands? To learn more about the innovative Payment Processing options offered with MonerePay, click below.

One of our ETA Certified Payments Professionals is always ready to advise you.