Multichannel Digital Wallets

With the introduction of wallet companies like PayPal in the late 1990s, the wal-let revolution had already begun, but it was intensified with the advancement in mobile technology and the availability of client-side scripting technology. With the launch of the first generation iPhone the smartphone industry and later other mobile devices transformed the way business was being done. Mobile devices slowly started becoming the preferred channel for e-commerce transactions. A large num-ber of apps were launched that were facilitating shopping using the mobile device directly. At the end of the purchase process, the customer would make the pay-ments. After the purchase was done, the customer would initiate a payment using his/her card information. At this point the mobile application enabling shopping would make a request to the payment gateway to execute the transaction. In this process, a customer has to remember his/her credit card information and there could be multiple cards he/she would wish to use. Additionally, every time, the user would have to specify his/her shipping and invoicing details. In some cases, the user would have to provide the loyalty information as well to accumulate miles from the purchase made. All of this together made the payment interface quite complex for a customer.

A more simplified version of the same could be wherein a consumer stores all his/her credit card/debit card/banking information in a single application and all his/her purchases can then be routed through this application. Such an applica-tion that could enable payments using a single interface for purchases made using

online or mobile channels is called a digital wallet. The digital wallet in turn could potentially store the credit card details, identity details, shipping and invoicing information and even could store loyalty-related information.

Mobile devices are personal devices and are secured with features like a one-time password, biometrics authentication and sandboxing of the application. The digital wallet applications can leverage these features to provide a secure interface to conduct payment transactions for a customer. Soon multiple start-ups began pro-viding digital wallet solutions including established telecom providers and phone manufacturers. Apple Pay and Google Wallets are some of the popular wallets from the phone manufacturers Apple and Google respectively. The digital wallet reached a new level of popularity and adoption with the embedding of a near-field communication (NFC) chip in mobile devices and POS systems. Consequently, NFC- enabled devices in close proximity could transfer information with each other, including payment information, through a simple tap. This transformed the payment experience as the customer was now able to carry out payments by just tapping the device or bringing it near to POS. The customer experience was far better than handing over his/her card/cash at cash counters followed by entering the pin and authorization numbers and ending with a paper confirmation of the payment. Additionally, with tokenization solutions and security solutions being standardized, the frauds in digital wallets are going down, driving their adoption and popularity further.

The introduction of multiple different currencies other than government-issued denominations like mobile money and cryptocurrencies drove the success and pop-ularity of digital wallets to a new high. Some of the wallets are also enabling pay-ments using cryptocurrencies like Bitcoin. One of the reasons for the popularity of wallets have been the offers and coupons issued by different wallet companies for using their wallets.

The adoption of digital wallets and people moving to online shopping and digital payments has prompted a lot of telecom providers and retail stores like Walmart (Walmart pay) and Reliance in India (Jio Wallet) to enable their own wallet solutions. The digital wallet industry can be further categorized into:

Digital wallets

Application supporting wallets

Onboarding and KYC applications

Post Author: newfintech

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