Diving into a cashless future of transactions via digital wallets that keep consumers safe and reduce paper and waste.
During the height of the COVID-19 pandemic, some people were spraying down their cash with alcohol and sanitizer spray and then rubbing their hands with antibacterial gel. By January of this year, the media began informing the masses that disinfecting every surface and for every touch probably isn’t necessary: Surface contact represents less potential to contract the coronavirus than initially thought. More recently, the CDC reported that contact with a contaminated surface has a 1 in 10,000 chance of causing an infection. But the early emphasis on safe and contactless transactions helped many people become comfortable with using mobile wallet services for making payments and receiving funds. Seventy-six percent of Americans bank via a mobile app.
According to data from BuyShares.co.uk, “Contactless payments are expected to continue rising worldwide and hit a $665 billion transaction value in 2021,” doubling up and reaching over $1.6 trillion by 2024.
Mobile wallets “store consumers’ data in one place, encrypted with one master root key,” said Will Graylin, the man behind Samsung Pay and founder of the mobile wallet OV Valet. “Currently, in the U.S. and most places, digital wallets are not yet universal and are either online, such as PayPal, Venmo, CashApp or limited to certain phones or OS such as Apple Pay, Samsung Pay and Google Pay, which primarily support credit card payments, but not other tender types.” A company will have admin access to the data, which Graylin says creates a challenge to store “more than basic billing, shipping and payment credentials, vs. sensitive data.”
There’s a lure to using a digital wallet. “In addition to supporting payments, mobile wallets support light-weight content for things like coupons and offers, loyalty and gift cards, tickets, and member cards and IDs,” said Elias Guerra, founder and CEO of Popwallet, who also suggested consumers consider it as a “mini app” to save onto a mobile wallets which “opens up a direct engagement channel” of communications between consumer and brand.
“There are many reasons consumers may choose a mobile wallet: Confidence, security, privacy, speed, anonymity,” said Paresh Patel, founder and CEO of PayRange. “Not all wallets offer each of the benefits the consumer may be seeking.” The consumer must understand what they’ll be using it for “and then match the wallet that meets those needs.”
And there’s data to back up the growing interest in contactless payment and its potential. Mobiquity’s Digital Banking Report found that bank customers would switch institutions if another bank offered better digital tools.
A curated list of mobile wallet services
Here’s a look at some of the available mobile/digital wallet services.
Scanit is used in the United States, Japan and is patent-pending in Europe. Its new technology reads QR and Direct Response Video codes from up to 60-feet away. The Scanit digital wallet allows users to complete contactless transactions from distances up to 20-feet away. Scanit embeds proprietary DRV codes in digital wallets, which can be scanned phone-to-phone, phone-to-ATM and from phone-to point-of-sale terminals. Transactions can be made with cash, credit cards, debit cards and cryptocurrencies.
Dayforce Wallet, developed by Ceridian, delivers on-demand pay, and more than 375 businesses have joined.
PayRange has been in operation for six years and recently celebrated recording $1 billion in cash and mobile transactions. The mobile payment network’s touchless system’s users average 15 transactions per month between laundry and vending machines. PayRange is powered by a Bluetooth dongle that plugs into an automated retail machine and uses the consumer’s smartphone for connectivity. In addition to processing mobile payments, PayRange-enabled machines report back cash transactions and other data to help better manage the business.
Veem provides online global payment solutions for small-to-midsize businesses. The company recently expanded multi-rail technology capabilities. Veem can be routed through six methods or “rails,” adding checks and enhanced digital wallet capabilities:
Digital wallet (global real-time wallet-to-wallet payments).
Blockchain (international real-time payment speed and settlement).
Treasury (international and U.S. domestic payment between Veem-managed bank accounts).
Swift (international payment routing without paperwork and bank processes).
Cards (U.S. domestic instant deposit to card payment transactions maintained by American Express, Discover, Mastercard and Visa).
Checks (trackable and integrated U.S. domestic payment option via Veem’s payment dashboard).
OV Valet is a new “super key” and universal wallet developed by Graylin, the former co-GM of Samsung Pay (which was previously Graylin’s LoopPay). It works on global systems and is a digital wallet “compatible with any smartphone.” It’s part of OV Loop and available for pre-order starting at $69. It stores multiple cards and transmits one-time use tokens at 94% of existing card readers worldwide. It will allow wallet app users to “safely pay online with dynamic card numbers to minimize fraud.” Digital wallets, Graylin said, “will become the norm in the future. They will also become super apps to provide personal financial empowerment.”
Global Payments: In response to the COVID-19 pandemic, Global Payments focused support for businesses with its enhancements in omnichannel technologies; this connects technologies (such as AI, robotics and IoT) that enable offline retailers to establish automated and predictive e-commerce divisions of their businesses as well as move to the cloud. Global Payments’ recent collaborations with Google and Amazon Web Services used cloud technologies for new services and more support.
BusyKid is a mobile wallet system for kids and teens. Family, friends and neighbors can pay for jobs like mowing a lawn, babysitting, washing a car and more using BusyKid. Instead of cash, money is digitally transferred into their BusyKid account, where it can be spent by loading it to their debit card, saved, donated or even invested by purchasing stocks.
PayPal may be the most identifiable name in digital payments–it’s long association with eBay added to that recognition. It’s probably not hyperbolic to say that PayPal introduced consumers to digital payments. The San Jose, California-based company processed a total of $285 billion in payments in the first quarter of 2021, up 50% from a year earlier, and added 14.5 million net new active customers.
Venmo, PayPal’s app that allows individuals in the U.S. to send each other money, processed $51 billion in payments in the first quarter of 2021, up 63%.
The future of mobile wallets
Consumers concerned about privacy should be aware of what personal information is being shared by the mobile wallet back to the merchant, especially in cases where it might be shared unknowingly, Patel said. “For example, a consumer may think they are simply sending payment, but attached to the payment could be the consumer’s name, address, phone, email, etc.”
Digital wallet users should be diligent about security. “Have strong user authentication,” said George McGregor, vice president of marketing at Approov, a security threat protection company. Consumers should be educated about and encouraged to use multi-factor authentication as well as “have an effective run-time shielding technology in place, making sure the API only serves requests coming from a genuine app instance. This combination of strong validation of the user identity and preventing any access from anything other than a genuine unmodified app gives a good level of protection.”
With so many mobile wallets to choose from, the consumer must be smart. “Understanding how the company encrypts our data is key,” said Graylin. “How will they use our data? What is their business model? Self-custody wallets will become the expectation.”Graylin continued, “We need wallets individually encrypted with the users’ own encryption keys to provide self-custody and respect for privacy” and give back control to users for their own data. Paramount, he added, are “security, privacy and control of the data.”
Even after the pandemic, said Faisal Nisar, vice president of product at the identity verification company Acuant, “digital wallets can support the need for new types of regulatory compliance surrounding those without financial or credit history, the use of cryptocurrencies in everyday transactions, the need for those looking to expand their market to embrace regulatory compliance, and the rise of continued alternative financing sources for those who have been missed by traditional financial services.”
In addition to cashless transactions, users can retain key benefits commonly associated with cash “such as anonymity, privacy, and limited exposure,” Patel said. “Mobile wallets can offer consumers enhanced security and privacy” as they “conduct transactions with merchants without the need to disclose the source card details and other personal information.”
“Many consumers, especially those in lower-income brackets, use cash as a budgeting tool,” Patel added. “They can physically set aside cash for different purposes, and when shopping, their spending is modulated by the amount of cash on hand. Prepaid wallets provide similar benefits while providing convenience of digital payment.”
“Within ten years the objects used to make physical payments, be it plastic cards, paper cash, or metal coins, will be obsolete, with most of that happening in the next five years,” Guerra said. “This isn’t science fiction either. Look no further than Asia for examples of countries where most commerce is transacted from the mobile phone. The rest of the world will catch up soon.”
“Digital wallets provide a user-friendly platform for everyday payments, digital identity storage, transit passes, plane tickets and more,” Nisar said. “With the bonus of added security, the future of digital wallets is limitless.”
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