Since the dawn of humanity, the payment for goods and services are done. The only thing changed is how the payment is accomplished.

The payment system has dramatically changed in the last few decades from bartering and physical currencies exchange to the plastic cards and e-payment. Presently, mankind is witnessing the biggest transformation in human history with the evolution of hundreds of payment apps, types, and portals.

The widespread adoption and technology advancement has brought significant changes to the payment space. This is why the headlines such as ‘Wallet wars’ or ‘ Apple Vs Samsung pay’ have become ubiquitous taglines for the major publications.

The wind of change is moving into the digital payment direction to keep the customers happy and let the businesses flourish with its adoption.

As the smartphone became the dominant internet access tool across the globe, it has started changing the fabric of the payment system, and the payment goes mobile. But, don’t confuse the mobile payment by digital wallets because both of them are two different trends that are ushering the new era of payment solutions.

Let’s first understand what is digital wallet:

The digital wallets are the virtual version of the physical wallets that electronically stores transaction data, user identification info, user rewards, tickets and other financial details in an encrypted way. They are created for the purpose- when the people forget the wallet at home or prevent the cases of potential theft of cash, cards, or important documents.

Just by simple setup process that involves credit or debit card scanning or key entering into the software, the people can successfully make the payments (buy concert tickets, make an online purchase, split bills with friends, or tip the driver) after the transaction authentication.

The definition of mobile payment:

Replacing the old-school methods like cash or checks, the mobile payments allow the users to pay using mobile phones through any of the platforms such as PayPal, Apple Pay, Google Pay, and others. Basically, the mobile payment is the mobile version of the digital wallet allow the people to trade on-the-go.

The businesses have taken the products and services on the road with easy payment acceptance through different types of mobile payments such as mobile wallet (Most used mobile payment solution is linked with cards that let users pay through NFC chips, BLE reader, or QR code scanning), mobile POS (The business owners have handy mobile devices to process the payment), mobile payment platform (The peer-to-peer transactions that allow users to pay online using the phone), direct carrier billing (The cellphone is used to pay for the apps purchased from the store), and closed loop payments (The apps built by the leading giants).

The amazing piece of technology has become integral to people lives and there are certain features that people expect minimally.

The fundamental features of the digital wallet and mobile payment system:

• Payment acceptance

Limited options no longer delight people. The digital payment solution must support all forms of digital payment such as EMV credit card or debit card, bitcoin, ACH, and loyalty card. The flexibility to add money and make the transaction through the preferred mode of payment mode make the payment convenient.

• Compatibility

Not all the smartphones in the universe have the necessary software to pay through Apple Pay, Samsung Pay, or Android Pay. It means the digital wallet should seamlessly work on the mobile software regardless of the type of device the user has, else you will be losing the large share of the customers for no reason.

• Order ahead

With mobile innovations, waiting in line has become a thing of the past. With mobile wallets, the customer expects an automated bill payment option, easy to load money, view transaction history, and real-time receipt as must-have features.

• Rewarding system

The integration of loyalty cards with mobile wallet apps help the customers to know the loyalty points or rewards as cashback earned for the purchase. Plus, the loyalty points can be automatically applied and redeemed for the purchase.

• Budget tracking

By facilitating the customers to monitor or track the spending, the wallet can help them control unnecessary expenses and plan the savings.

• Perform to the notch

The app that meets the instant gratification need of the customers excels in the market. When the app loads at speed and immediately connect with the bank servers, the customers love to use such wallets.

• Security

With increasing cyber attacks, security is the topmost concerns for the people before using any wallet. The wallets must be double-password protected, the financial information is encrypted so that it cannot be read by the machine or other apps, and biometric authentications can be used.

Benefits of digital wallet system:

The mobile wallets that add convenience and comfort to customers also drive in the range of benefits for the merchants. They are:

• The mobile wallet apps eliminate the need for employing cashier or buy expensive POS solution to process the purchases. The apps like Square reduce the transaction cost by eliminating intermediary involvement.
• Giving a great sense of satisfaction to the customers as just ‘a tap’ through phones would process the payment and they are not required to stand in long queues.
• The new venture unfolding various business opportunities to earn potential revenue with access to customer’s data in the real-time.
• Gain a competitive advantage as the business is staying up-to-date with technology progresses and enhancing the customer experience with new forms of faster and secure payment.

What future has in stores for us?

After looking at the digital wallet and mobile payment trends of last few years, it’s a clear signal that this form of payment is no longer a novelty option, instead, it has become a key enabler of commerce to increase sales opportunities and surge revenue. The wallets are living up to its much-created hype in terms of the immense success gauged by Apple Pay, Google Pay, PayPal, and other emerging wallets.

Reducing the friction, the payment apps are now making their inroads into wearable devices, and connected cars that allow the users to pay without making the effort of even taking the phone out of the pocket.

The latest cryptocurrency has become the hottest trend that’s catalyzing the payment revolution by handling most of the transactions securely.

The apps such as Circle, Square, and Revolut have incorporated cryptocurrency to allow users to buy and pay using virtual cash, and even invest and follow the market right through one app.

The next-gen bank has revamped the loyalty program with blockchain technology to offer personalized rewards to the customers. What’s next? A ton of amazing things that will transmogrify the customers in future.

Conclusion

Let’s accept it: The digital wallets and mobile payments soon land us on the cashless planet where the payment becomes an effort of tapping a button, nodding your head, or speaking a couple of words. Going beyond smartphones, wearable and blockchain technology is making great strides and expect to lead the future of payment. Till then, wait and watch which payment type phased out for another better form of payment.

This article is contributed by Patel Nasrullah, co-founder at Peerbits — web development company.

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