Low cost and high efficiency are highly desirable for every small business owner. Particularly when one is stripped for time and has multiple things to manage. As such, payments can be a tricky area to navigate for many small and medium-sized business owners. Digital payments are huge – almost every other customer prefers them today. Going cash-only is not the best option anymore. Data from Europe’s top 5 e-commerce markets shows strong consumer preference for digital methods to pay. Think cards, digital wallets, and the like. Only in Germany or Italy cash use for in-store transactions are still a thing.
For a small business owner, thankfully, there are now ways to easily accept digital payments. And without having to spend a lot of time or money. In this article, we tell you about one such method – digital wallets, and why they are one of the best payment methods for small business owners who want to accept digital payments.
So, what is a digital wallet?
Digital wallets, also called mobile wallet or e-wallet, are mobile apps that encrypt and store users’ payment info like credit/ debit card and bank account details. Apple Pay, Google Pay, and PayPal are the most well-known e-wallets that work globally. Digital wallets are simple and easy to setup, cost very less to operate, and promise secure payments. And they are easy and highly convenient for customers to pay you digitally – either at your store, within your mobile app, or online on your web shop. No surprise, they have been growing at an explosive rate, and rank amongst the top 3 most-used payment methods in Europe now. As proof, more than 44% of Europeans say they prefer to pay with their digital wallets apps.
How do they work?
E-wallets use NFC technology to enable quick, touch-free payments at a physical store. All customers need to do is open their e-wallet app on their phone and pay by clicking a button or by scanning the merchant QR code at checkout. These wallets are highly secure because they use multi-factor authentication, tokens, and other measures to ensure transactions are secure.
Reports predict that Europe’s mobile wallet transactions will increase by 277% over the next three years. What’s more, digital wallets will be used in over 50% of global e-commerce transactions by 2024.
3 Reasons Why Digital Wallets are a Great Fit for Small Business Owners
1. Simple, fast, and secure payments
Whether you are accepting payments from customers or paying your employees and suppliers, digital wallets work in each of these use cases. Shoppers can use e-wallet apps to pay for purchases instead of having to use physical cards every time. This is convenient for the shopper because they don’t have to type in their card details every time they shop. They can easily pay touch-free and with just one click.
Users can install e-wallet apps on their mobile device (smartphone, tablet, smartwatch) and link it to their cards or bank accounts. To make a payment, a user opens their app and scans the merchant QR code or holds their phone over the merchant’s NFC-enabled POS terminal. This allows for easy, contactless payments. No more typing card details or waiting in line, just scan and go. This leads to faster checkouts and shorter queues. Less time spent in payments, mean more time for other tasks.
While paying suppliers or your staff, you can directly transfer money to their digital wallets from your bank account or digital wallet. This is quick, simple, and fast, saving everyone the hassle of late payments. Digital wallets are highly secure because they use secure tokens, MFA, biometric facial/ fingerprint recognition, and Device Primary Account Number (DPAN) to encrypt and protect payment data and keep transactions safe.
2. Easy to set-up and operate
Digital wallets (and QR codes) are easy and quick to set up. They offer zero-touch, fuss-free payments that can be used anytime, anywhere – in-store, in-app, or online. Payments via QR codes are huge in Asia but are now catching up in Europe and the UK. Setting up QR codes are cheaper than expensive POS card readers. Plus, they can be easily integrated into your payment ecosystem.
Customers can pay by scanning the merchant QR code at stores or on the merchant’s website. Alternately, customers can download QR codes onto their own devices, which a merchant scans when the customer pays at the store or on their web shop.
A point to note here. There are local digital wallets in Europe that are quite popular as well, such as iDEAL in the Netherlands. So, if you are a seller in the Netherlands or sell to customers there, be sure to offer iDEAL as a choice in the list of payment options. All major banks and card schemes support major e-wallets like Apple Pay, Google Pay, and PayPal.
Know more: Top 3 digital wallets in Europe
3. Low cost of installation and operation
Most digital wallets don’t cost you much (or anything, actually!) to set up and operate. For example, both Apple Pay and Google Pay are free of charge for merchants and consumers. That means you do not have to pay any card processing fee, interchange fee, or commissions for accepting/ sending payments using Apple Pay and Google Pay. However, PayPal charges merchants fees for transactions and using their services. Be sure to check with your payment provider (or PayPal) on the fees that are applicable for the markets where you operate or are based.
How Can Novalnet Help?
We can help you set up digital wallets so that you can easily and quickly start accepting payments. Based on your business goals, we can help you choose the e-wallets that are best suited for your business, guide you with the right strategy and tools to get you going. Novalnet is a global PSP, trusted by Europe’s leading brands to handle their payments. Our state-of-the-art technologies and methods help you accept payments globally. From our instant payment plug-ins to our AI-based risk management tools, we have the resources to get your payments up and running in no time, and with zero hassle.
Reach out to us today to know more.
Jose Augustine is the Chief Business Development Officer at Novalnet with extensive experience in European payment industry and a knowledge powerhouse.