Upgrading to a Digital Wallet
What started as a way to carry “soft” or electronic money is evolving into a digital wallet service that can benefit both franchisors and their customers.
As smartphones grow more powerful, their uses continue to expand, displacing the need for other products. For example, there are far fewer small cameras and GPS devices today compared to five years ago because these functions are now performed by smartphones. What else may be displaced by smartphones in the future? How about our wallets? Some experts say it’s only a matter of time.
It makes sense. Why carry around a wallet packed with credit and debit cards, loyalty cards, coupons and cash — when all of these items can be stored digitally and accessed elegantly via a smartphone application that facilitates purchases with a simple swipe at checkout? Your smartphone already has your pictures, coupons, sticky notes, business cards and just about anything else you currently carry around in your wallet. Why not money?
That’s the theory behind digital wallets, a combination of software and data that stores a consumer’s information and then uses it to complete financial transactions. PayPal is probably the best-known example of a digital wallet commonly used in a desktop or laptop environment to purchase goods or services over the Internet. Consumers can set up an account, enter information for multiple credit and debit cards and bank accounts, and then pay vendors through the PayPal site.
Extending digital wallets to smartphones makes the process even quicker and easier for consumers, particularly in a brick-and-mortar store.
Since financial and identification data is securely stored, consumers save time and aggravation by not re-entering their credit card numbers, addresses or any other personal or account information during each purchase. Franchisors gain fraud protection and the ability to offer a broadly accepted standard for payment. The costs for these transactions are generally borne by the seller in a manner similar to credit or debit card transactions.
Extending digital wallets to smartphones makes the process even quicker and easier for consumers, particularly in a brick-and-mortar store. To access a digital wallet from a smartphone, the consumer simply holds his or her smartphone near a digital reader at a merchant’s cash register or another point-of-sale device. Wireless technology, called near field communication, allows both parties to complete the financial transactions quickly, efficiently and securely with a simple tap or swipe.
Benefits for Franchisors
Digital wallets promise great benefits for consumers, all boiling down to convenience and better organization. And savvy franchisors and franchisees can improve the overall customer experience they offer, as well as create competitive differentiation in their marketplace by allowing customers to utilize digital wallets.
Thanks to the growing power and usefulness of smartphones, what started as a way to carry “soft” or electronic money is evolving into a digital wallet service that can benefit both franchisors and their customers.
Popular Digital Wallets
- PayPal, owned by eBay, is already used by many online retailers. PayPal launched a smartphone app last year to complement its online product.
- Google Wallet lets users store credit cards and gift card information online as part of their Google account, which is easily accessed through their Android smartphones.
- Visa offers its V.me app for digital wallets and recently added a number of banks and online merchants as partners.
- Isis is a digital wallet app that’s backed by AT&T, T-Mobile and Verizon.
- Merchant Customer Exchange is a digital-wallet app backed by several major merchants including Wal-Mart, 7-Eleven and Target.
- Serve is a digital prepaid account from American Express that functions like a prepaid credit card (with a mobile app). Users can link their Serve account to a bank account to reload their digital wallet and pay wherever American Express is accepted.
- Square, the popular way for merchants to accept credit cards through a smartphone, also offers a digital wallet for consumers.
Smart Wallets Benefit Consumers and Franchisors
One-click payment. Amazon.com instituted this concept online, and it has definitely gained momentum. One-click payments, or one-tap payments via a mobile device, speeds the purchase process allowing greater turnover or throughput at lower cost. This improves return on investment for a franchise, work environment for employees and wait times for customers. Consumers also have instant access to all potential methods of payment, such as credit cards, debit cards and checking accounts, without doing anything more than using their smartphone.
While some consumers sometimes leave their money or wallet at home, they never go anywhere without their smartphone.
Easier returns and refunds. With some retail outlets, if a customer tries to return a product, but forgets the receipt or credit/debit card at home, he or she typically receives store credit. However, with a digital wallet, the credit/debit card — and the digital receipt — are always within reach.
Easier management of rewards and loyalty cards. Nearly one-third of loyalty points go unredeemed each year. As loyalty programs proliferate, few consumers carry all of their loyalty cards with them or want to go through the process of providing their identifying information to take advantage of loyalty program benefits. Storing loyalty cards in a digital wallet and automatically accessing them during checkout via a smartphone readily solves both of these problems. And, the easier it is to accumulate and redeem loyalty points, the more consumers will participate.
Competitive Advantage. Accepting payments from digital wallets may also create an element of differentiation between similar franchises, giving your business a first-mover advantage in a crowded, competitive marketplace. Providing a better customer experience and competitive differentiation can add up to greater customer loyalty, one of the primary goals of any franchise organization. The fact that your company can usually accomplish this at no cost or even with a cost savings is a bonus. Your franchise business does not want to deny your customers any method of payment if you can help it.
Getting Started. Any franchisor could set up a unique digital wallet for customers to use, and some have already done so within their mobile apps. However, most franchisors would be better served by adopting one or more of the commercially available digital wallets. With the amazing amount of mobile apps available, hunting for and opening a unique app can become a deterrent — unless you know your app is going to be stored on the home page of your customer’s smartphone.
Charles Austin is president of AdGeo, Inc., which provides mobile marketing, call routing and interactive voice response services to franchises large and small. He has particular expertise in wireless technology and can be reached at 314-336-3202 or email@example.com.