An increasing number of online platforms are adopting digital wallets to facilitate secure and fast payment transactions. Over half of the world will switch to digital wallets as their preferred payment option by the end of 2024. According to a study, almost 80% of GenZ users prefer digital wallets.
That means a large chunk of future shoppers will be looking for e-wallets when making a payment online. And online businesses must integrate digital wallets on their platforms to avoid abandoned carts and increase sales. In this article we will dive into the benefits of digital wallets to online businesses and how they can choose the right one for their platform.
Why Are Digital Wallets Important for Online Platforms?
While the stats indicate a shift to digital wallets among consumers, they don’t speak of the reasons behind this change. Let’s understand what digital wallets offer the end user and how they are crucial to the overall experience.
- Convenience: Anyone who’s ever used a digital wallet will attest to the fact that it is by far the most convenient way to make online payments.
- Security: There is a whole set of security features such as tokenization, encryption, and biometric authentication that offer users peace of mind while making online transactions using a digital wallet.
- Engagement: This is a dual benefit. Seamless transactions result in user satisfaction which builds loyalty thereby enhancing engagement with the platform.
- Personalization: Personalized insights into the user’s spending patterns also boost user engagement. All this and the speed and efficiency of the transactions make digital wallets a great choice for consumers.
How to Choose the Right Digital Wallet for Your Platform?
There are several considerations to take into account before choosing a digital wallet for your online platform. Research into your target audience’s preference is a good place to start. Then comes the costs, compatibility with your platform and the overall ease of use.
Another important thing to understand is the types of digital wallets.
- Closed Wallet: This type of wallet limits the transactions to a few merchants and the transactions can happen within a closed system. Gift cards are a good example of this type of wallet.
- Semi-closed Wallet: Now this type of wallet allows transactions at multiple places but there are restrictions on withdrawals. It is a great fit for platforms that do not wish to let users transfer money from the wallet to other accounts.
- Open Wallet: If interoperability is what you’re looking for, this type of wallet is what you need. With an open wallet, users can make transactions across different services and merchants. Some examples include PayPal, Google Pay, and Apple Pay.
Nature of Your Online Business and the Choice of Digital Wallet
Online platforms that experience high engagement along with high volumes of transactions need to have a fast, secure, and convenient payment option.
Online shopping portals, ticket booking platforms, and online gaming portals such as sweepstakes casinos are examples of platforms that can benefit from digital wallets.
While online shopping portals could use a mix of closed and semi-closed types of wallets to run loyalty programs that increase user engagement, sweepstakes casinos must go for the open wallet.
Players on these casino sites are looking to take their winnings home instead of spending them on something else on the same platform.
As such, interoperability is a crucial characteristic of a digital wallet that online platforms like this need to allow its players to redeem their sweepstake coins for real money.
Improving User Experience with Digital Wallets
Digital wallets offer many benefits to the end user. However, it comes down to offering an enhanced user experience. Here are a few ways to do it on your online platform.
- Seamless payments: Reduced steps in the transactions and faster checkouts make for a seamless payment experience.
- Incentives: Offering incentives to customers paying with a digital wallet such as discounts or cashback further boosts engagement.
- Mobile-ready: Ensure that the payment methods you offer are optimized for mobile since most transactions now happen on mobile.
Conclusion
Digital wallets are the future of online payments. As the new generation of users shifts to e-wallets for online transactions, businesses must rethink their payment solutions to future-proof their platforms. A seamless payment experience is crucial for building loyalty and improving user engagement. It can make or break an online business in a world where convenience is the bedrock.
