Payment tech set to make physical wallets a thing of the past

Digital wallets for a digital world
Digital wallets for a digital world

Consumers' appetite for mobile and digital shopping is at an all-time high. According to new figures by the Centre for Retail Research, the UK will see a 16 per cent growth in online sales in 2014.

This provides retailers with a great opportunity, but at the same time puts them under greater pressure to keep up to speed with payment methods which are increasingly quicker, safer and more convenient. The way consumers are choosing to shop and pay has changed dramatically, with the growing number of digital wallets designed to respond to this change.

The term "digital wallet" refers to a card vault that can house the details of credit, debit and prepaid cards. The consumer can then select which card they want to use for making a payment in an e-commerce transaction.

In many cases this online wallet can be accessed via a mobile device or tablet which is crucial for consumers' purchase preference.

Competitive space

With the digital wallet space currently a hotly contested sector of retail technology, it can be difficult for retailers to decide which option they should consider. Some organisations remain cautious when it comes to embracing new methods of transacting with customers in the digital space.

However, many retailers are discovering that it is not just the consumer that will reap the benefits from digital wallets. For example, customers who might have been concerned about using their card on an unfamiliar website now have the comfort of knowing that their card details are stored securely and will be shielded from the retailer, and are therefore more inclined to make a purchase.

In addition to changing consumer behaviour, increasingly retailers are expecting their staff to carry mobile devices in store, such as tablets, on which consumers can make purchases by logging into their digital wallets, evolving the way customers shop.

With all new technology an adoption life cycle occurs – and this includes payment technology. The digital wallet market is fairly young and there is still a lot of development activity going on.

Inevitable growth

Currently, digital wallets are mainly used by early adopters, but given increasingly mobile lifestyles, it is inevitable that the way we pay will become more and more digital. Consumers will always opt for the minimal click check out process, so ensuring that they have maximum convenience while trusting the service they are using will be vital to success.

For decades, the leather wallet has been a loyal companion. It stores the personal items we need to go about with our lives: cash, ID card, driver's license, credit and debit cards. We carry our wallet with us and protect it so it neither gets lost nor stolen. But we also do the same with our mobile devices, so we end up carrying both around.

Technology will soon be ready to make us start thinking about leaving the leather wallet at home and switching to the digital version altogether.

  • Mark Giffin is Head Go To Market by Visa at Visa Europe.