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The pandemic is reshaping the traditional payment experience, with consumers preferring to pay using mobile devices and providers focusing on delivering mobile-friendly solutions. Consumers increasingly go digital, and during the next decade, they are forecasted to complete over 2.7 trillion transactions globally by using cards or digital wallets. Financial institutions should meet the contemporary demand of their target audiences.

So which of the two given above payment options сurrently wins the popularity race? What are the top digital wallet solutions your business may consider to stay afloat in the face of competitors? This article discusses the differences between digital wallets and cards and offers a quick guide to choosing your best digital wallet providers.

Digital wallets in a nutshell

A digital wallet is a system that allows consumers to keep personal payment information and passwords in a single place and pay for goods or services online and offline. With payment processors, like PayPal, Apple Pay, and Google Pay, consumers may use their digital wallets seamlessly across many countries, or digital wallet software may be a part of a bank’s mobile app. 

Consumers can transfer their payment information from one wallet to another, pay with a single account, or receive payments using digital wallets. Besides, contactless paying with mobile devices or wearables, compatible with digital wallets, is a safe payment method during the pandemic.

Blockchain technology has made virtual wallets even more popular than before. Cryptocurrencies work solely with digital wallets to complete transactions in Bitcoins or other digital currencies.

Digital wallet or credit card: which one is the best for your consumers?

Both payment methods are a must-have for your business. You should not eliminate a tried-and-true method of paying by cards merely because of technological development. Different consumers should be allowed to opt for a payment option that is more convenient to them, which will help you increase conversion. 

Currently, digital wallets are the payment method number one among e-commerce consumers worldwide who made over 44% of e-commerce transactions using virtual wallets in 2020. Digital payments enable multiple benefits that credit/debit cards cannot ensure.

Pros and cons of digital wallets

Consumers prefer digital wallets over debit/credit cards because of the seamless, contactless, and secure payment experience. The wish to harness the following perks:

• There is no need to enter payment data for every transaction: it is already stored in a single place.
• No sensitive information is shared directly with providers as digital wallets use secure tokenization.
• Consumers do not need to carry physical wallets or cards and may pay using devices that are always with them.
• Digital wallets streamline shopping on smartphones.
• AI-powered wallets support voice-based interactions and execute pre-planned transactions.
• Contactless payments are a safe method in the pandemic and post-pandemic world.
• Owning a crypto wallet is mandatory to enter the cryptocurrency market.  

However, opponents could argue that digital wallets have flaws:

• Companies gain another tool to collect consumer data, which might result in a loss of privacy.
• Banks could face eroding consumer trust as they remove the human element from financial operations.
• Consumers’ funds might be exposed to increased cybersecurity risks in the digital environment. 

Despite some weaknesses of digital wallets, many consumers think about them as the solution they always needed. 

Benefits and drawbacks of credit/debit card payments

This proven payment method might seem outdated, but lots of consumers still prefer this payment method for several reasons:

• Paying with a card is more common across physical stores and other institutions.
• Not every consumer would trust a third-party provider to gather payment information. 
• A human touch for financial operations is still vital for many consumers.

Proponents of credit/debit card payments would hardly deny some weak points:

• Paying with a card is becoming old-fashioned.
• This method is less convenient as it requires data entry for each transaction.
• Not all the cards are contactless, which makes them unsafe in pandemic conditions.

With all the pros and cons explained, let your consumers decide on the payment method they would like to use, while you should make both the options available to them.

Top 5 digital wallets to know in 2021

More and more consumers prefer purchasing on their smartphones or tablets. According to Forbes, 72% of e-commerce sales will be completed via mobile devices by 2021, and the global e-commerce market will grow by 61% in the next two years. The demand for trustworthy providers of digital wallets would probably soar.

Several industry leaders provide digital wallet software that may help you scale up your business or enter new geographic regions. Read on and learn about top providers of electronic wallets.

PayPal

Being the best-known digital wallet, PayPal supports 25 currencies worldwide and functions in 200 countries. PayPal enables completely secure paying and insuring options, which boosts consumer trust in this provider despite the costs of servicing that might be high. 

Due

Due suits small businesses, provides a secure digital wallet and enables e-payments, e-banking, and payment processing. Its key advantage is a fixed 2.8% commission that users of the digital wallet need to pay.

Google Pay

It is another world-known payment platform with which you can increase sales dramatically. Google’s digital wallet is already available to users in 28 countries, which could be helpful if you are looking for a business expansion abroad. Besides, using the app for business, owners could accept fees directly on their bank accounts.

Samsung Pay

Samsung provides a digital wallet for easy, secure, and smart payments on the go, allowing consumers to get a credit card that fits particular needs, select loan options, see a personal credit score, and receive points on further purchasing per transaction. The wallet has three levels of security that guarantee the safety of consumers’ funds. 

Zelle

Zele facilitates exchanging funds with users who have a different U.S. bank. This digital wallet is designed for business purposes, especially as a banking app for large companies, and may incur some limitations and extra fees for making transactions.

Summary

Booming digital services make digital wallets the future of payments. Digital wallets already account for almost half of e-commerce payments and may attract more consumers who have changed their shopping and payment habits during the lockdown. Businesses and individuals increasingly choose to pay digitally, spurred by significant growth in transaction volumes, revamped consumer experience, and increased merchant acceptance. 

When choosing a digital wallet provider, consider the location and payment preferences of your target audience. Remember that payment options you provide to your consumers should cater to the needs of those preferring advanced payment methods and those feeling more convenient to use cards. That is a great way to win consumer loyalty and reach new audiences worldwide.