The Role of Mobile Wallets in eCommerce Growth Strategy

E-commerce, as well as any other industry, tends to grow. The global market is changing every day. We can already track these changes. For instance, an e-commerce growth strategy resulted in the evolution of online stores, and it actually made a digital transformation into mobile commerce these days.

Actually, modern e-commerce platforms are progressive online stores, which are commonly used both on desktops and mobile devices. On the one hand, their main purpose is still the same - selling goods. However, nowadays these platforms provide a variety of additional features that are used to improve the user experience and customer services. For instance, different technologies and software are being implemented. Such things as comparison feature, that allows comparing similar products by their characteristics, price, popularity, etc. Another example of such techs is advanced user interface design patterns, that create a unique user approach and interaction possibilities.

Eventually, there are many other samples of such improvements. One of the most recent solutions is the development of mobile wallets and their implementation in this industry. So what is the role of digital wallets in e-commerce growth strategy?

What are Mobile Wallets?

They are modern technology, used to improve the user experience related to finances. They are also known as digital wallets.

This fintech solution is basically a virtual version of a regular cardholder with one major difference: it is online. Actually, most mobile wallets are apps, that are used to simplify payment process. For instance, users add their banking cards to the app and then can use this application as an intermediary between the salesman or a shop and bank account.

One of the most important innovations, related to mobile wallets, is the NFC. Near-Field Communication is a technology, used for wireless communication between mobile devices. For example, users can perform automatic payments simply by bringing the phone closer to the terminal using contactless cards. The protocol works and the online payment is being done.

Nevertheless, it is not the only possible way to use these apps. Talking about the role of mobile apps in e-commerce growth strategy, it must be said that mobile wallets greatly simplify various procedures. In particular, they can be used as storage for the information needed for transactions or delivery services. In this case, when the mobile shopper makes the first purchase and fills in all the needed fields, the app can save this information and autofill these fields next time. 

Mobile wallets are usually divided into three types:

• Closed is when the wallet works only with a specific platform or company. Consequently, all transactions are being made between only 2 participants: the specific salesman and the customer. In case of refunds or cancelations, money are being transferred back to the closed wallet. AmazonPay is a reference sample of such wallets.
• Semi-Closed mobile wallets have some limitations as well. For instance, they can be platform-dependent or the transactions can be made after the recipient signs the contract agreements with the developer. Best examples of this type are Apple and Google Pay (they depend on the mobile platform and region, where transactions are being made).
• Open. Obviously, this type is the less limited one. In this case, most transactions are possible, sometimes they allow even ATM cash withdrawals. Mostly, such type is developed by banks in a form of open baking APIs. Talking about third parties, we might say that PayPal can be considered an open mobile wallet.

Mobile Wallets in E-Commerce

Clearly, the e-commerce market can use digital wallets for online payment transactions. Moreover, they have already become one of the main ones. No matter if it is an open banking API, semi-closed, or closed type - all of them are regularly used on different platforms.

One of the best cases, that shows the role of mobile wallets in e-commerce growth strategy is how they are used in standard application stores. For instance, Apple Pay is the only mobile payment option in AppStore. Almost the same situation with Google Pay and the Play Market. At the same time, Amazon Pay is one of the main payment gateways for Amazon services.

As we can see, mobile wallets play their role as a payment method for e-commerce software. Of course, this part of the mobile commerce process is mostly organized for merchant services. Moreover, most of them are integrated into the e-commerce software, which the same companies developed. Clearly, this indicates the importance of such a feature. So what can digital wallet implementation change or affect?

1. User Experience

The most obvious and common argument for the implementation of mobile wallets is that they improve the users' mobile experience. Even if we narrow down its functions only to the role payment gateway, we can track qualitative changes in the user experience.

For instance, all the required procedures are greatly simplified to one-click confirmation. As a result, the user doesn’t have to copy his card details such as card number, expiration date, CVV code, etc. All of these actions are being done automatically and all the customer has to do is confirm this action by passing the security check. 

Of course, it is just a single aspect. Nevertheless, everyone will agree, that the procedure of filling up all these fields is indeed annoying action, especially if it has to be performed at least a few times a day. The payment API is used to facilitate this action and allow performing it in one or two clicks, without even physical credit cards. Which improves customer retention for the online shopping platforms. 

Additionally, using this software allows for saving information from other fields. For example, the user can save his private information such as name, surname, address, etc. So, the next time when the purchase is done, all the additional info can be filled in automatically by payment API software.

Moreover, mobile wallets are regularly used not only online. As a matter of fact, they are a great mobile payment option in regular shops as well. For instance, they allow customers to leave their cash and credit cards at home and to use a phone instead. The simplicity and convenience of using this technology, as well as the availability of the phone at hand, create almost perfect conditions for going shopping.

2. Audience Reach

In addition to the improved customer experience, the integration of open banking APIs into e-commerce software helps to increase the audience reach. For instance, it provides various features and opportunities that increase the target audience. 

As mentioned before, 2 out of 3 payment APIs require permission from the mobile wallet developer. On the one hand, it limits the opportunities for the online store. On the flip side, the developer of the digital wallet becomes a stakeholder. This means that the more people use these payment APIs - the better for the developer. As a result, stakeholder stimulates their customers to use the online store, they are cooperating with.

As a result, such integration is an additional advertising source. Usually, it is being done in a way of mutual mentioning and various bonus programs. For example, giveaways or cashback can be used for these purposes.

3. Payment Gateway

It is the most obvious, nevertheless worth mentioning mobile wallet usage purpose. From the perspective of the e-commerce development plan - the appearance of mobile commerce with various payment methods are one of the most essential features. 

Obviously, money flow is very important in the e-commerce market. As a result, we can assume that the main objective of the e-commerce growth strategy is to increase income as well. 

In this case, the more payment gateways are embodied - the bigger the money flow is possible. This is why it is highly important to increase the amount of open banking APIs and other mobile wallet types available for the online store.

Summing Up

Clearly, technology does not stand still and is constantly improving. As we can see from the statistics, the world goes virtual day by day. For instance, according to Statista, the number of digital buyers worldwide grew from 1.32 billion in 2014 to 2.14 billion in 2021 and it keeps growing. 

The emergence of the neobanks, coupled with the increasing popularity of mobile devices, cryptocurrency technologies, and the usage of tools like NFC allows making a prediction: at least partly, the future is after the mobile market.

Eventually, we can see the tendency of digital transformation already. Even though all these changes and innovations seem small, they are gaining popularity. The reason is that the devil is in the details, meaning that all these seemingly trivial things simplify the routine affairs that are being done every day. As a result, in the long term, it makes a great difference.

Summing up all the above, we may conclude that mobile wallets have an important role in the e-commerce growth strategy. As a matter of fact, the provided payment gateway possibilities are a powerful instrument, that impacts not only the mobile commerce sphere but must be considered as a fintech revolution, which impacts various industries and has a perspective to become one of the preferred payment methods.

This is why it is highly important to keep developing such e-commerce platforms, that can be used to improve it and enable additional features to the payment API technology. 

Our development team has the required experience, as well as all the needed skills and tools to embody any product that is related to e-commerce software. We offer development at all stages, starting from planning and ending with supporting the final product. If you are interested or have any additional questions - just contact us.