Digital payments are growing fast. Recent studies estimate that by 2020,
726 billion transactions will take place worldwide using digital payment technologies.
Yes, that fast.
As customer trust in digital wallets grows and use becomes more widespread, ecommerce merchants should consider updating their stores to include these alternative payment options.
While digital wallets might not be on your radar at the moment, they really should be if you want to stay ahead of the game. It’s important to remove as many conversion barriers as possible to win a sale, and digital wallets are a great way to do that!
In 2017, 21% of users surveyed said they had abandoned their shopping cart due to the checkout process being too long (up from 19% in 2016!).
Offering expedited payment options such as Amazon Pay or PayPal at checkout allows customers to quickly move through the checkout process - they can complete their purchase with one or two clicks (rather than re-entering information they've already stored elsewhere).
Hold up, what is a digital wallet?
A digital wallet is a system that securely stores users' payment information and passwords for numerous payment methods and websites.
Digital wallets can be used in conjunction with mobile payment systems, which allow customers to pay for purchases with their smartphones. A digital wallet can also be used to store loyalty card information and digital coupons.
Examples of the most popular digital wallets include: Google Pay, Apple Pay and Amazon Pay. Some of these also include an integrated mobile payment system component. Many large financial institutions have also launched digital wallets in the last several years, including MasterPass (Mastercard) and Visa Checkout.
While Apple Pay continues to be the leader in the digital wallet space, other options are quickly catching up.
Are digital wallets and mobile payment systems the same thing?
A digital wallet is what a user stores their information on; the user then uses it to complete a mobile payment. Digital wallets can be used on mobile devices, as well as on desktop computers and, in some cases, in physical stores.
Both mobile payment systems and digital wallets can store a user’s payment and, at times, shipping information to streamline online transactions. Both also use tokens to enhance transaction security.
And, perhaps most importantly, both are growing quickly in both consumer use and merchant acceptance.
Why does this matter to an ecommerce merchant?
According to a survey from the American Bankers Association, only 12 percent of US consumers trust alternative payment providers to protect their payments (despite 25 percent of consumers having used a mobile app to make a payment).
Have you ever been ready to buy something online and then realized you’d have to get up and walk to another room to get your credit card, and delayed the purchase as a result? Or gotten frustrated by having to enter your shipping and billing addresses again? Digital payments offer customers an easy way to breeze through checkout without having to re-enter all their information.
Studies have found that digital payment checkouts convert better than checkouts without digital payment options. A recent study in May, 2018 found that “PayPal checkout converts at 88.7 percent – 82 percent higher than a checkout without PayPal.”
82 percent higher!
Digital wallets and payments are also growing in popularity among young customers. More than 50% of customers surveyed in the 18-29 age group and 43% of customers in the 30-59 age group have said they use or would ‘probably’ use digital wallets & payments in the next year.
These demographics make up a large chunk of traffic for many ecommerce sites, and it’s important to remove as many conversion barriers as possible to win their sale.
How do I add digital wallets to my store?
Make sure they’re implemented in a way that will reduce, not increase, friction at checkout. The design elements will vary by site, but the general best practices for implementing digital wallets at checkout include:
- Offer wallet options that are in line with devices your customers are using. If 75% of your mobile traffic comes from iOS, you’re probably better off offering Apple Pay than Android Pay.
- When in doubt, err on the side of the most popular options - PayPal and Amazon Pay are the two most popular digital payment options at the moment.
- Don’t deter from your main call-to-action. The digital wallet option call-to-action should be secondary to your main Checkout button.
- Finally, don't forget to monitor engagement with the options you decide to offer, including the conversion rate!
Shopify and Dynamic Checkout
Shopify has caught onto this trend, and they recently announced a Dynamic Checkout option, which gives customers the ability to skip checkout with Apple Pay, Amazon Pay and PayPal.
All a customer needs to do is tap the icon from the product page, scan their thumbprint, then, voila! They'll be all checked out.
Yes, checkout can really be that simple. And your customers will thank you for it! If you need any direction on adding a digital wallet to your store, we are here to help.
Let's talk strategy!