A lot of people are talking about how mobile wallets are revolutionizing the way people pay for things. These innovative payment technologies are already influencing consumer purchasing habits. But business people need to take care before opting to make any drastic decisions—especially involving payment processing.
So, are mobile wallets good for ecommerce?
What Is a Mobile Wallet?
A mobile wallet is simply an application on a smartphone or other compatible device that stores payment information. With a mobile wallet, you ideally don’t really need to carry cash or credit cards with you in order to make purchases from stores. Even if you don’t have a mobile wallet yourself, you’ve likely seen people use them. They typically work by holding a smartphone over a compatible payment terminal. Apple Pay, Android Pay, Google Wallet, Alipay and Samsung Pay are some of the most popular mobile wallets right now. A combination of encryption and fingerprint technologies generally make mobile wallets more secure than cash or cards.
It’s estimated about 40 percent of consumers in the U.S. are currently using mobile wallets. That number, however, is set to increase as the technology becomes more commonly used at physical vendors.
But what do mobile wallets mean for people trying to operate an ecommerce business?
Mobile Wallets Can Lead to Higher Conversions
As more and more people start using mobile wallets, it will help drive conversion rates for ecommerce vendors. There are a few factors behind this. Currently, smartphones lag behind tablets and desktops/laptops in terms of conversion rates by a pretty significant margin.
Traditional ecommerce converts at a bit better than four percent; tablets convert at about 3.7 percent; while smartphones are only a bit better than 1.5 percent. Mobile wallets lower the impetus required to make a payment. Apple Pay, for instance, just requires the user’s fingerprint in order to process a payment. The simplicity of this touch-to-pay method has the potential to drastically improve conversion rates for ecommerce.
Furthermore, having more payment options makes purchasing a product easier for a larger group of people. If your ecommerce store only lets people pay with a credit card, you’re going to inherently turn away customers who strongly prefer using other methods.
Certain Industries Will Benefit More Sooner
It’s important to note that not all ecommerce vendors will see the exact same benefits from implementing mobile wallet payments. Thinking about ideal customer profiles is the best way to understand how much mobile wallets will drive additional sales for your e-store.
Consider this: If your product offerings are generally geared toward a crowd that isn’t particularly tech-savvy, they might not even know how to use a mobile wallet.
On the other hand, a Shopify-powered ecommerce store selling electronics online will see a much more tangible benefit from mobile wallet adoption. This is because these consumers will likely be more accustomed to using modern payment methods; and may even expect techie e-stores to keep up with the times.
Mobile Wallets Are Important for International Ecommerce
Ecommerce vendors trying to break into the international marketplace should really consider the benefits of mobile wallets. There are a few reasons why mobile wallets are even more important for online stores selling to global customers.
First, smartphones are more accessible to people than computers, especially individuals in rapidly developing nations like India and South Africa. It’s far more practical to own a smartphone than a laptop or desktop. Additionally, many people in developing economies don’t have a formal bank account. This makes it much more difficult to sell goods to them if you primarily operate through credit card payments. By enabling mobile wallet transactions, your ecommerce business will be much better suited for attracting international customers.
There are many reasons why mobile wallets are an increasingly important aspect to running an ecommerce business. Consider how introducing these payment methods to your e-store can be a driver for revenue.