Maintaining a bank account is not an absolute necessity if you have an opportunity to produce a bank account in a payment system and start your digital wallet for receiving payments for goods and services.
In this article, we cover the five core advantages of ingenious payment instruments for sellers.
Client experience transformation is an inevitable trend under the influence of new technological services – that is a fact. Retailers implement new settlement approaches that make the buying procedure comfier for clients than ever. Some of the most prominent uprising trends in Europe is the use of e-wallets- retailers’ own digital payment wallets.
As distinct from payment services, traditional financial and credit structures are more inertial, as it is more difficult for these to remain flexible as required by the present needs of the market. A bank’s function switches towards that of an intermediary in the dynamically changing environment of financial technologies, being concentrated at solution basic elements, like bank accounts and payment cards.
An ever-increasing share of European customers tends to switch from conventional payments with plastic cards towards online payments through mobile phone apps.
Development of the segment of FinTech solution straight correlates with the electronic commerce advancement level, customer earnings level, and the competitive environment in retail markets of different countries.
According to the information offered by Ecommerce Europe, an average Western European resident spends about 2 492 Euros a year online, whereas in Central and Eastern Europe these figures are, respectively, 1 055 and 629 Euros a month.
At that, the gap closes due to the growth of the new mobile generation: young people find it simpler to pay by operating a payment application on their devices than with a bank payment – at that, the percentage of these people is going to grow constantly due to natural reasons, and the average income level of the “gadget generation” is going to increase imminently.
Global experience
Walmart, the globe’s biggest retailer, has commenced the trial run of its digital wallet solution, Scan & Go. The principle of operation is easy: the purchaser scans the bar codes of the goods to be purchased, and the total quantity of the purchase is deducted from the buyer’s account through a mobile payment service mobile phone app upon leaving the shop location.
Big European retailers implement such solutions, which tend to improve and become ever more sought-after and comfortable by customers. The Starbucks coffee house network reports that a 25% share of all transactions is carried out via mobile payments.
This includes a 6% share of payments through the Starbucks Order and Pay, a cart-and-wallet mobile application that combines the functions of ordering products from the menu with payment facilities.
The benefits of e-wallets as compared to conventional payment methods are too obvious to be disregarded. These are:
1. Minimal commission charges
As the payment card issuer and transaction operator, the bank charges a commission fee for its solutions, which is payable by retailers. Amounts of commission charges may differ, but usually, the bank’s margin depends upon the turnover of a particular retailer – the greater is the sales volume, the larger are the fees. To make their company more profitable, retailers face the demand to reduce transaction fee costs.
One of the solutions in this instance could be the issuance of one’s own branded payment card. This is a chip card or magnetic card used to pay for purchases made within a single network, the so-called closed-loop card, which can also be used as a loyalty card, a credit card, a savings card, a discount card, etc- a local variation of Visa and MasterCard. Customers must use these cards frequently for this scheme to become more lucrative for a retailer. Costs of card emission also need to be considered.
A digital wallet is quite similar to this card, the difference being that this is an electronic version that a customer can install and download on his/her mobile phone in just a few clicks.
Thus, the retailer saves the costs of providing a plastic card, whilst retaining the full functionality of the solution. This also implies lesser transaction charges paid to the banking company, which can entail the better affordable performance of one’s services and goods.
Sales and turnover are anticipated to increase in this case, although the average receipt total could be less. Digital wallet apps may be weaved with various client loyalty stimulation programs, such as projects, discounts, bonuses, etc, which also improves conversion in retail trade.
2. The purchasing procedure is altering
Electronic wallets allow retailers to implement and use new technologies, like augmented reality and chatbots. Service advancement is a great strategy to attract new customers and increase the loyalty of existing ones. Apart from that, a dedicated e-wallet allows a retailer to develop unique customer-oriented deals through the analysis of client choices.
A single mobile app integrates several features, like over-limit, gift codes, loyalty programs, bonuses, coupons – at that, a customer can pay for the purchase with any resources offered, without regard for fine points. Chatbots and individual trusted shopping agents that recommend a particular purchase based upon the customer’s habits and remind the user to buy ice cream for his/her kids and plants for his wife – this is what tomorrow’s retail appears like.
3. Purchase insensibility
The 2nd principle for a retailer, following the maintenance and improvement of earnings levels, is the development of max comfort for the buyer. A perfect purchase transaction is the one that goes unnoticed by the client.
According to the statistics, 38% of Europeans would be willing to opt-out of buying anything due to a long queue, whereas 86% of clients feel cognitive stress while standing in the check-out line. All it requires to make a payment via an e-wallet app is just a few seconds and touches – these solutions save one’s time and nerve by eliminating the need to stand in line.
4. Extra expense saving
A digital payment from an e-wallet through a payment service is legitimate proof of a transaction, just like a printed cash receipt. This could be a guarantee policy, post-warranty, evidence for claims, etc.
The development of such technologies as the RFID electronic tag brings about the prospect of saving the costs of printed materials and tons of paper presently used for the production of billboards, leaflets, and discount coupons.
Payments through mobile applications are also going to reduce the costs of employed personnel for retail business owners – so many checkout cashiers and cash-in-transit providers will not be required anymore.
5. Safety first
Banks – more particularly, bank account funds – are the key target for online criminals. Many large retailers have negative experiences resulting from hacking, compromise, and theft of information. However, total retailers’ losses from hacker attack amount to less than 4 million Euros. What are the security advantages of a digital wallet solution?
Customized retail payment services can be based upon the tokenization innovation (replacement of traditional card numbers with unique dynamic identifiers – tokens), which is a more reliable means of data protection than two-factor verification.