Digital Wallets: Grow Your SMB with More Payment Options

While I’m a believer in The Paradox of Choice — Why Less is More, I don’t believe this is applicable for payment options: SMB’s should offer more payment options to their customers, including digital wallets.

I’ve listed three reasons why you should include digital wallets as payment options for your customers.

1. Easier for Customers

2. More Payment Options Equals More Sales

3. Less Fees for Your Business

1. Easier for Customers (and Business Owners)

In store mobile payments and online digital wallet options improve customers’ shopping experience; in store purchases are completed with a fraction of the time when customers can check out using their mobile phones.

Online purchases are just as seamless; customers save time as they don’t have to search for their debit or credit, enter their information and worry about whether the checkout process is secure. For example, Apple Pay uses a method that encrypt customer data with tokenization. What great about this methods is that credit card numbers are replaced with a token and is protected with a password or Touch ID, which increases security and decreases the possibility of fraud.

Less fraud put customers and merchants at ease and reduces the time they boss would hypothetically spend refuting charges and dealing with fraudulent activity in general.

While increased security is great for both parties in a transaction, offering digital wallet payment option makes your business more competitive as more customers are adopting digital wallets.

2. More Payment Options Equals More Sales

More payment options equal more sales. According to a study by Visa, mobile payment usage is quickly increasing – in 2017, U.S. consumers used their phones to pay for nearly USD $50 billion worth of goods and services at a physical point of sale. This figure is expected to continue to grow by double digits through 2021, to roughly USD $190 billion.

Being that more than 40% of the U.S. population owns an iPhone and a large portion are Android phone users, the aforementioned statistics from Visa’s study don’t surprise me. In addition to Apple Pay, smartphone users can make payments using other digital wallets like Google Pay, Samsung Pay, Paypal and Venmo.

Another major advantage to using these platforms customers avoid fees as they can transfer funds due to the peer-to-peer nature.

Business and consumers have in China adapted to use both WeChat (Tencent) and Alipay (Alibaba) for almost everything, like paying their utility bills and making everyday purchases. While I don’t think this type of system will stop people from using credit cards, but a new types of ecosystems have formed and changed the people make purchases.

Alipay recently formed a partnership with Worldpay, which will help Alipay break into the U.S. market. You learn more about digital wallets by downloading Worldpay’s 2018 global payments report.

3. Less Fees for Your Business

When users make purchases at a business using a digital wallet, it remove interchange fees, standard banking fees and gateway fees. All of these fees add up and hurt both the consumer and merchant, especially interchange fees. American Express has its own set of fees as well.

The major benefit of digital wallets is that it creates ACH agreements between their bank accounts and their respective digital wallet, so customers aren’t charged additional fees.

Since digital wallets don’t charge fees to merchants, businesses can pass on savings to their customers (if they choose to do so; I’ve seen this on ecommerce websites) if customers opt to with pay digital wallets and not credit cards.

Conclusion

Customers’ demand of convenience and security are shaping the way businesses conduct their business. Digital wallets seem like they’ll be a major factor and going to continue to thrive in the business ecosystem for foreseeable future, because they can help reduce fees for both brick and mortar stores and online businesses.

At the end of the day, change is inevitable so how SMB’s react to change, specifically with regards to accepting digital wallets, is up to each business owner.

I look forward to hearing your thoughts in the comment section!  If you enjoyed this post, feel free to share it with someone you think will find the content useful.

Also, let me know if you see any errors or outdated information!

 

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