One of the newest wrinkles in the financial universe is digital payment systems in the form of electronic wallets, commonly called eWallets. These digital bits of code are simply a cyber/electronic type of payment card, and they reside on your phone or other device (smart watch, laptop, tablet, or desktop computer). These eWallets have the power to conduct financial transactions on your behalf as long as they are directly linked to a card or bank account of your choosing.
Once they’re set up, you need not carry a plastic card with you, but you will need to have your electronic device to make payments. There are dozens of important benefits for both consumers and merchants who use these enhanced payment systems, plus a few temporary downsides for consumers who either don’t like eWallets or don’t have access to merchants who accept the new payment technology.
But, as is true with every fresh form of technology, there is no shortage of myths surrounding eWallets and digital payment methods. Here are the major pieces of misinformation you are likely to encounter, along with the true story about each one:
The 7 Myths to Watch Out For
Here are the seven myths/lies, along with the real story/truth:
- Myth: Security is a Big Problem In fact, mobile wallets and eWallets are much safer than traditional plastic credit cards. That’s primarily because thieves can’t steal a “virtual” card nor can they see the numbers when you use it to pay. All data is carefully encrypted.
- Myth: Non-Digital Payment Systems Aren’t Beneficial for Customers or MerchantsCustomers enjoy extreme ease of payment, and merchants see higher profits, better customers loyalty, and faster access to revenue.
- Myth: There Aren’t Enough Users Right now, there are about 2 billion users of eWallets worldwide.
- Myth: DPs and EWs are a Fad Growth of EW usage is high. There are about 150 million new users every year. Young, working adults increasingly believe that all financial transactions will eventually become cashless as society transforms away from paper currency and coins.
- Myth: They’re Expensive for Merchants and CustomersThis major myth is based on fear. The fact of the matter is that merchants pay exactly the same fees and processing costs with EWs as they do with all credit card payments.
- Myth: Merchants Lose Out on Customer DataThe true story here is that merchants get exactly the same amount and type of consumer information as they get from standard credit card users.
- Myth: They Don’t Boost Conversion RatesIn fact, recent data has shown that eWallet conversion rates are about three times those of other forms of payment. Merchants who offer eWallet options have an easier time converting email offers into in-person store purchases.
Is There a Downside?
For merchants, there really are no disadvantages of eWallet and digital payment usage. The only potential downside is for consumers, but all of the current challenges will eventually be overcome as technology advances and people become more familiar with the systems. Keep in mind that there were initial hurdles with ATM cards, plastic credit cards, online bill-payment, and e-checks. In time, the buying public accepted those methods once the glitches were worked out and security was firmly in place.
When it comes to digital payment methods like eWallets and others, the outlook is positive. However, for consumers, there are a few temporary negatives, including the following:
- No Universal Availability: There are still geographic pockets where DP and EW payment is not available, even though coverage is growing at a rather fast rate. Still, for consumers who want a 100 percent rate of usage, that level of acceptance is still a goal. Consider that it took several years for cellphone and standard credit card systems to cover the majority of the world’s major cities.
- You Need a Card: Regardless of how quick and convenient digital payment can be, consumers still need to carry either a card or an enabled device that includes all the security codes and account information. So be ready to have a phone, wrist device, or physical card with you when you get ready to purchase something from a retailer.
- You Might Be Tempted to Spend More: The “spendthrift” danger has been a warning that we hear from time to time. It goes like this: “If you have such an easy way to pay, then you’ll be tempted to spend too much.” The argument makes sense but doesn’t play out in the real world. People have had plastic credit cards, ATM cards, and online payment ability for decades. The power to spend has not translated into over-spending, except for people who would over-spend anyway.
- Some Rewards Programs Aren’t Worth It: Consumers do have to pay attention to the details of reward programs because some are high-fee arrangements. You could end up paying a higher processing fee that might negate the “reward,” you are aiming for. The majority of programs that reward you for using an eWallet of digital payment method, however, are advantageous for customers who use them.
- Your Device Must Be In Working Order: If your device is not charged, or is otherwise in a state of disrepair, you could find yourself without a way to pay. But that’s only if you rely solely on eWallets. When your phone battery dies or the device is broken, you could always use a standard credit card or ATM card as a backup in those rare situations.
- There are Some Security Risks; As with every other type of payment system, there are security risks. However, eWallets come with their own, inherent ways of deterring fraud, so you have to weight the pros and cons from a consumer perspective. If you use a merchant who has a non-secure system, you’ll always be at a disadvantage, no matter what kind of payment you use (unless it’s cash).
What is the Next Phase in Payment Evolution?
For merchants who are ready to take the next move and enable all their point-of-sale locations with the right kind of technology, the decision is an easy one. It means getting up to date on payment terminals, gateway terminals, e-commerce solutions, POS systems, wireless terminals, e-check processing, virtual terminals, and everything else that makes it easier for customers to make quick, seamless, secure purchases of goods and services.
At Metro Payment Technologies, we understand how all the new technology can seem overwhelming for companies that are already struggling just to stay afloat. But in the long-run, it makes sense to get on board and be prepared for a financial environment in which nearly all purchases will be done with digital payment methods like eWallets.
Feel free to give us a call at our toll-free number, 1-800-771-3719, and find out how easy it is for your company to become a part of the fast-pay universe in which money flows quickly and easily from the consumer’s wallet into your business. We have been helping entrepreneurs and owners of large companies upgrade their systems and prepare for the coming of a new era in e-commerce, the era in which “digital” is the main way for consumers to make online and in-person purchases.
If you’d like to learn more, check out our website or simply send us an email at service@metropaytech-com.stackstaging.com. The age of digital payments and eWallets has arrived. Be ready to take advantage of the golden opportunity.