Digital Wallets and Modern day Shopping
A digital wallet refers to an electronic device that allows an individual to make electronic commerce transactions. This can include purchasing items on-line with a computer or using a smartphone to purchase something at a store. An individual's bank account can also be linked to the digital wallet.Payments landscape is very dynamic. The global payment trend indicates that the industry will continue to grow with new innovations, new regulations and mandates being rolled out by central banks and new payment programs being introduced in different regions. Business is witnessing a lot of activity around Digital – Faster Payments, Digital Wallet, IoT payments, Payment Hubs, Blockchain technology, Contextual Commerce and Security mechanisms to support these new payment trends. The buzz word is "Go Digital".
Today, mobile wallet is driving the retail payment market upward, the various contactless payment technologies that increase mobile wallet adoption.
In the last couple of years, the retail payment sector (which caters to the P2P and C2B transactions) has undergone lot of disruption, key ones being customer demand for a convenient, frictionless, faster and anytime payments. Traditional payments front ended by financial institutions lack these value proportions expected by customers. Though cards segment, the traditional segment of payments space, which includes credit, debit and pre-paid remains strong and has been major revenue source for retail banks. There has been a shift towards mobile wallets as an alternative payment method.With smart phones being available under $100, mobile phones have become ubiquitous. Their usage is expanding beyond the horizon; what started as a mere communication tool now cuts across all spheres of our life. People can now go out for shopping carrying just their mobile phones; no need for wallets, cash, cards.
We see non-bank companies entering this space to tap into the opportunities provided by the smart phone era. They are providing contactless payment solutions using NFC (Near Field Communication) or MST (Magnetic Secure Transmission) for exchange of data, biometrics for user authentication and EMV tokenisation for securing the transactions. There is a huge line of payments products – Android Pay, Apple Pay, MCX-CurrentC, Walmart Pay, Samsung Pay, SoftCard, Amazon Payments and much more.
Many wallet solutions in today’s world provide value additions, such as Rewards & Loyalty program, Contextual Marketing, Location based Coupon program, etc. These add-on features increase customer adoption and satisfaction. For example, imagine receiving reminders when you pass by retail store selling your favorite merchandise along with coupons for the same.
Challenges of Mobile WalletsSmartphone acts as an end point for social networking, tool for quick search of products, storage device and finally, yes, a payment instrument. Smartphone penetration is a prime factor for growth in digital wallet.
The user experience at the checkout counter is still not frictionless and is cumbersome. Few scenarios require the customer to position his/her phone at a particular angle or get too close with the individual at the counter.
Merchants are not ready to make huge investments in required hardware (NFC-enabled POS terminals), which is required for customer to use Mobile Wallet at store.
While QR code technology does not require specific hardware, there is lack of user familiarity and requires specific reader software.
Customers get abandoned shopping carts when mobile wallet does not function 5. Few solutions require customers to have an additional hardware on their phone in order to perform contactless payment transaction at store. This dissuades them from adopting contactless Mobile Wallet solutions.
Customers are concerned about the security of their card and are looking for a solution that will offer convenience along with high security standards.
The ideal solution We are seeing multiple Contactless Payment technologies that are competing with each other in today’s Payments landscape, but with very little impact on increasing their customer base. Each solution has its own limitations that restrict wide spread adoption of the solution.
Main Features of Digital WalletsFrictionless, smooth and seamless user experience throughout the shopping journey at the store — Customer should be able to complete his/her payment at the checkout counter with zero manual entries, just one/two taps.
No additional hardware requirements or special features (NFC / MST) on smart phone — Customer should be able to use the digital wallet solution on the regular smartphone OEM device without NFC/MST or hardware related additions. Digital wallet solution will have the required libraries to enable the smart phone to interact with POS terminals.
Accepted at all merchant stores regardless of the availability of NFC enabled POS terminals – Non availability of NFC enabled terminals leads to abounded shopping cart and unhappy customer. Let’s look at different scenario where customer has our ideal solution on his/her smartphone (even without NFC). When customer completes shopping, he heads to manual checkout register, taps his/her smartphone on non NFC terminal and data gets exchanged between mobile & POS using secure (encrypted & tokenisation) sound waves. Payment gets completed successfully and digital receipt is sent to the customer. This way we have a happy customer & merchant.
Perfect even without internet connectivity – At times, internet connectivity from MNO gets dropped at the most misappropriate moment – when we are ready to make payment at store checkout counter, about to complete a purchase on mobile site, having an important conversation on mobile. It is great to have a wallet that supports payments even when mobile is offline or in airplane mode.
Contextual proximity engagement and smooth Payments leg.
Acceptance at different types of un-attended terminals (EDC, Cash register, Kiosks, Display boards).
Strong security features that go beyond vanilla industry standards – Adherence to EMV tokenisation & PCI guidelines are the bare minimum standards that industry expects. Solution goes beyond this and includes multiple levels of encryption, Transactional OTP and more controls at customer end and Bank end.
Today, mobile wallet is driving the retail payment market upward, the various contactless payment technologies that increase mobile wallet adoption.
In the last couple of years, the retail payment sector (which caters to the P2P and C2B transactions) has undergone lot of disruption, key ones being customer demand for a convenient, frictionless, faster and anytime payments. Traditional payments front ended by financial institutions lack these value proportions expected by customers. Though cards segment, the traditional segment of payments space, which includes credit, debit and pre-paid remains strong and has been major revenue source for retail banks. There has been a shift towards mobile wallets as an alternative payment method.With smart phones being available under $100, mobile phones have become ubiquitous. Their usage is expanding beyond the horizon; what started as a mere communication tool now cuts across all spheres of our life. People can now go out for shopping carrying just their mobile phones; no need for wallets, cash, cards.
We see non-bank companies entering this space to tap into the opportunities provided by the smart phone era. They are providing contactless payment solutions using NFC (Near Field Communication) or MST (Magnetic Secure Transmission) for exchange of data, biometrics for user authentication and EMV tokenisation for securing the transactions. There is a huge line of payments products – Android Pay, Apple Pay, MCX-CurrentC, Walmart Pay, Samsung Pay, SoftCard, Amazon Payments and much more.
Many wallet solutions in today’s world provide value additions, such as Rewards & Loyalty program, Contextual Marketing, Location based Coupon program, etc. These add-on features increase customer adoption and satisfaction. For example, imagine receiving reminders when you pass by retail store selling your favorite merchandise along with coupons for the same.
Challenges of Mobile WalletsSmartphone acts as an end point for social networking, tool for quick search of products, storage device and finally, yes, a payment instrument. Smartphone penetration is a prime factor for growth in digital wallet.
The user experience at the checkout counter is still not frictionless and is cumbersome. Few scenarios require the customer to position his/her phone at a particular angle or get too close with the individual at the counter.
Merchants are not ready to make huge investments in required hardware (NFC-enabled POS terminals), which is required for customer to use Mobile Wallet at store.
While QR code technology does not require specific hardware, there is lack of user familiarity and requires specific reader software.
Customers get abandoned shopping carts when mobile wallet does not function 5. Few solutions require customers to have an additional hardware on their phone in order to perform contactless payment transaction at store. This dissuades them from adopting contactless Mobile Wallet solutions.
Customers are concerned about the security of their card and are looking for a solution that will offer convenience along with high security standards.
The ideal solution We are seeing multiple Contactless Payment technologies that are competing with each other in today’s Payments landscape, but with very little impact on increasing their customer base. Each solution has its own limitations that restrict wide spread adoption of the solution.
Main Features of Digital WalletsFrictionless, smooth and seamless user experience throughout the shopping journey at the store — Customer should be able to complete his/her payment at the checkout counter with zero manual entries, just one/two taps.
No additional hardware requirements or special features (NFC / MST) on smart phone — Customer should be able to use the digital wallet solution on the regular smartphone OEM device without NFC/MST or hardware related additions. Digital wallet solution will have the required libraries to enable the smart phone to interact with POS terminals.
Accepted at all merchant stores regardless of the availability of NFC enabled POS terminals – Non availability of NFC enabled terminals leads to abounded shopping cart and unhappy customer. Let’s look at different scenario where customer has our ideal solution on his/her smartphone (even without NFC). When customer completes shopping, he heads to manual checkout register, taps his/her smartphone on non NFC terminal and data gets exchanged between mobile & POS using secure (encrypted & tokenisation) sound waves. Payment gets completed successfully and digital receipt is sent to the customer. This way we have a happy customer & merchant.
Perfect even without internet connectivity – At times, internet connectivity from MNO gets dropped at the most misappropriate moment – when we are ready to make payment at store checkout counter, about to complete a purchase on mobile site, having an important conversation on mobile. It is great to have a wallet that supports payments even when mobile is offline or in airplane mode.
Contextual proximity engagement and smooth Payments leg.
Acceptance at different types of un-attended terminals (EDC, Cash register, Kiosks, Display boards).
Strong security features that go beyond vanilla industry standards – Adherence to EMV tokenisation & PCI guidelines are the bare minimum standards that industry expects. Solution goes beyond this and includes multiple levels of encryption, Transactional OTP and more controls at customer end and Bank end.
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