By Dee and Emily Karawadra
The way we pay for merchandise and services is changing. A few years ago no one had heard of EMV chip cards, and now it is mandated that merchants and card issuers have this technology. We are now seeing a shift in payment methods from cash, check and credit cards to mobile wallets, contactless payments and digital invoices.
An electronic wallet (ewallet) – also called a mobile wallet or digital wallet – is a type of electronic card that is used for transactions made online through a computer or a smartphone. Its utility is the same as a credit or debit card. An ewallet is linked with an individual's bank account and/or credit card to make payments. This eliminates the need to carry cash, checks or credit cards.
Convenience to the consumer is driving the need for new payment methods. This is why we see an increase in usage on products like Apple Pay, Android Pay, Samsung Pay, Google Wallet and Amazon Pay. In 2014, Apple launched its first mobile wallet app. Samsung and Android introduced competing products the following year. In 2018, an eMarketer survey found that 22 million U.S. consumers used Apple Pay's mobile payment solution. The transaction value of mobile payment apps is projected to reach an estimated $14 trillion by 2022.
Mobile payments are used every day by millions of people, but who is using what? Different demographics adopt technology at different paces. Studies show that the 18- to 34-year-old age bracket has the highest adoption of ewallets: almost 50 percent of smartphone users in this group have an ewallet installed; 32 percent are interested in having one. The 35- to 44-year-old demographic shows 44 percent have an ewallet installed; 25 percent are drawn to the possibility of having one. Elders, ranging from 55 to 64 years old, are becoming increasingly savvy: just under 30 percent have an ewallet; 27 percent are interested in the idea.
What this tells us is that the ewallet and payment apps have staying power, and we in the merchant service industry need to offer merchants the ability to process these types of transactions. Having the technology available so shoppers can wave or tap their smartphones at the POS rather than pull out and dip their credit cards is going to allow payment professionals to tap into this $ 14 trillion market. More and more, late adaptors are coming to find peace of mind in the secure storing of their card data and not carrying their credit cards with them.
Today, accepting digital wallets is as simple as a customer tapping a phone at a merchant's POS device. This form of payment uses near field communication (NFC). NFC technology is built into the majority of today's payment-acceptance terminals and other devices. NFC securely transfers data between mobile device and POS using radio frequencies. The near in NFC means that the consumer needs to be in close proximity to the payment terminal.
As an ISO or merchant level salesperson (MLS) in the payments industry, providing this technology in your payment terminals or dongles allows you to tap into this growing ewallet market. The ability of the merchant to accept these transaction types only increases the merchant's monthly volume, which in turn raises your residual.
In addition, many ecommerce merchants are learning of the benefits associated with offering digital wallet acceptance as well. Digital wallets online rely on tokenization to make checkout easy for consumers. Tokenization enables one-click checkout, which speeds up the checkout process. Consumers are freed from having to complete payment and address information, making checkout easier and reducing cart abandonment.
If you have ecommerce merchants in your book of business, it may make sense to circle back to them to make this available to their checkout process. The question is, are you a laggard or an early adopter? Don't be late to the party. Get educated, and educate your current merchant customers. If they already have this technology, make sure they know how to use it. This will help you retain your merchant base while you continue to build your business.
This can be used to obtain new merchant accounts as well. It can be hard to keep up with what technology to push and what technology to take a watch-and-wait approach with. The ewallet is now an established payment option, and projections have its use only increasing in this age of security and fraud prevention concerns.
We have spoken to many MLSs who are hesitant to push the ewallet payment method with their merchants. Maybe they themselves don't use ewallets, or they don't understand the technology. Even though tap-and-pay is available with the new EMV technology, they haven't taken the time to train the merchant on how to accept these types of payments. Thus, merchants tell customers who ask about using a ewallet, "No, it's not available." This only hurts the merchant's sales and the agent's residuals.
What we have seen countless times is the MLS will lose the account to another agent who talks to the merchant about ewallets and the new technology behind them. So, the merchant leaves, never realizing they can already accept those payment methods. We push to educate our merchants on the capabilities of their payment devices, giving them the freedom to accept all payment types and sell more products and services. One of the most valuable tools to have in your arsenal is educating the merchant.
Dee Karawadra is president and CEO of Impact PaySystem, and Emily Karawadra is the company's chief financial officer. Since 2001, Impact PaySystem has been a leading provider of payment processing technologies and services to merchants throughout the United States. Through alliances with payments industry leaders such as Chase Paymentech, First Data, Buypass, Sage and more, Impact PaySystem offers tailored solutions to meet the unique needs of each merchant. Dee and Emily will welcome your questions and comments at firstname.lastname@example.org and email@example.com, respectively.
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