Wallet payments have advantages for customers and merchants
E-wallets are gradually conquering the market for payment services. While there is still room for improvement in terms of the technology's use in Germany, it is an everyday digital form of payment in Asia. Wallets offer their users a fast, secure and easy way to make payment transactions and are also often cheaper than, for example, a credit card payment. Some wallets offer additional features, such as peer-to-peer payments and ATM withdrawals. Others store loyalty cards, coupons, boarding passes, tickets and more in one place, in addition to payment information.
We explain how digital wallets work and why your business should support them at checkout.
What is a wallet?
An e-wallet is a wallet on a smartphone, or in digital space in general, because some services can also be used normally on a PC or notebook. When "filling" this wallet, two fundamentally different models are differentiated:
- Credit is deposited into the wallet before it is used, most often by credit card payment, (instant) bank transfer or direct debit. In this case, the e-wallet is based on the prepaid principle. Users can only spend the amount that they have previously deposited into their digital accounts.
- A reference account is deposited for settlement purposes. In this variant, no money is deposited, but the data of a credit or debit card. Accordingly, the required payment amount is debited directly from the deposited account by the wallet operator.
How does paying with a wallet work?
How a wallet payment is released depends on where it is used:
For payments at the checkout, the smartphone – with an integrated wallet – and the merchant's terminal communicate via Near Field Communication (NFC). The customer verifies the payment by entering a password, fingerprint or facial recognition, for example. In the case of wallets that can be accessed via PC, payment is usually initiated by entering a password or PIN.
The payment information is sent in encrypted form, and the transaction is completed.
Benefits for customers and retailers alike
There is no need to search for and enter payment data, which is time-consuming. Therefore, wallet payments offer a faster checkout process compared to wire transfers or card payments. For merchants, this means a higher conversion rate. In addition, merchants save the time it would take to reconcile the books.
Many digital wallets offer multiple currencies and are available across different regions. If merchants accept the major digital wallets, they can reach more international customers accordingly.
Even if the smartphone or smartwatch is lost, there is no risk: Since card data is stored in the wallet in a tokenized manner (and transferred to the payee), this sensitive information is protected at all times. Strong customer authentication (SCA) also ensures security during payment. The higher level of security can also mean lower interchange and card fees for digital wallets.
Special case: Platform wallets
A special type of wallet is linked to e.g. NFTor crowd payment platforms. They allow the user to make platform investments, buy and trade NFTs or receive interest pay-outs, etc. The existing balance can also be paid out to a deposited bank account. This wallet type also includes crypto wallets, which can be used to store purchased cryptocurrencies.
secupay supports wallet payments
Mit unserem Walletsystemen ermöglichen wir es IHREN Kunden, online mit einer gespeicherten Karte oder einem digitalen Wallet-Guthaben zu bezahlen.
We offer prepaid wallets that can be topped up again and again and used for payments until the balance is used up. Our customers use this technology, for example, as a parking wallet, to conveniently pay parking fees with their smartphones. Wallet solutions for our platform customers are the basis for fast drops and secure investments. The wallet credit is held in our escrow account in compliance with the ZAG (German Payment Services Oversight Act) until it is used. All wallet transactions are tracked in the secuOffice online portal. This allows platforms to always have an insight into how much credit an investor has available in their wallet and how much they can use for new investments.