It wasn’t long ago that we were fumbling through our wallets and purses to get the right debit card out to pay. Either that or flipping through an array of loyalty cards to find the right one for the shop we were in.
But those days are in the past for many consumers, as new payments innovations emerged, changing the way people purchase goods or services. The rise of digital wallets has steadily gathered pace.
Digital wallets, also known as mobile wallets or ewallets, are an easier, lighter, and (thanks to their contactless nature) more hygienic way to make transactions. Outside of standard online card transactions, digital wallets dominate the ecommerce payment landscape. According to our Retail Report 2023, 30% of Australian consumers preferred paying with digital wallets like Apple Pay or Google Pay when shopping in stores. Similarly, 29% of Australian consumers preferred paying with digital wallets when shopping online.
What’s a digital wallet, and how does it work?
A digital payments system is built for electronic transactions either using cards (like Visa, Mastercard, and American Express), user accounts, or pre-loaded funds. Instead of pulling out a card to re-enter details for every transaction, a digital wallet stores all necessary information needed to make a purchase.
Peer to peer payments are also available with some wallets, while others allow ATM withdrawals. All users need to do is confirm their identity, through the likes of a password, fingerprint, or facial recognition amongst other verifications.
How? Through secure software and tokenized credentials. Tokenisation is a strategy that encrypts card data and connects to the issuing banks when a transaction is triggered to create a specific token to be used for the specific purchase. Whether your shopper is paying through a near field communication (NFC) connection in store or through other means on their computer at home, you as a business won’t receive any card info – just the token to complete the payment.
Digital wallets are used for more than transactions though; tickets, boarding passes, vouchers, and loyalty cards are just some of the other documents that can be stored. No carrying around a stash of printouts and tickets before travelling, and no more hoping your worn-out loyalty card from your favourite cafe will still collect points. This builds real brand affinity between you and your customers, as people use the wallets for all areas of life.
Now that you know how digital wallets work – let's clear up a common misconception between digital wallets and mobile wallets. 'Digital wallet' is a blanket term that includes mobile wallets. A digital wallet can be installed on your mobile device, laptop, or desktop computer. However, a 'mobile wallet', like Alipay or WeChat, only works for mobile devices like smartphones and smart watches.
What’s behind the big boom?
One of main contributors to the growth of digital wallets is the acceptance and usage amongst the younger generation. Growing up in a more tech savvy world means this group is adopting them as a preferred form of payment, embracing the benefits as the norm.
When we look at the benefits for businesses and consumers, it’s easy to see why they are being chosen more and more over physical cards. Digital wallets offer a safe and smooth customer experience. Created specifically for commerce today, tokenisation ensures that the customer's payment information is never shared directly. Instead, a unique payment token, accompanied by a cryptogram that expires after one use, makes the chances of a fraudulent payment low.
Additionally, Strong Customer Authentication (SCA) is also built-in for some digital wallets. In order to make payment, your customer needs to verify each transaction with a password, fingerprint, facial recognition, or other verification methods. This makes them more secure than card payments, where identity verification isn't always required. So it’s not only easier to pay, but safer, too.
Let’s dive into the most popular wallets in Australia.
Top digital wallets used in Australia
Apple launched its own wallet back in 2014, available on iPhones, Apple Watches, Macs, and iPads. Usable in person via NFS terminals, through iOS apps and on Safari, Apple Pay truly taps into all areas of iOS users’ lives by giving them an effortless way to pay built into their devices. And it’s a payment method oozing with style, with Apple’s distinct UX lending itself perfectly to the overall process.
Apple Pay is great for retailers and businesses relying on high frequency orders, such as food delivery companies and cafes. Having it available via app or website immediately boosts conversion rates. This could be due to the fact that shoppers don’t need to leave the page to pay – a real perk for them and yourself. Plus, authorisation rates are high thanks to strong authentication and secure storage.
Google Pay™, or G Pay to its friends, came about in 2018 after the clever unification of Google Wallet and Android Pay. Like its iOS counterpart, the wallet can be used in stores, via Android apps or online in the Chrome browser, using card details saved to a Google account. Thanks to Google’s strong security and identity control, Google Pay™ transactions are less likely to be rejected than regular card transactions.
One standout feature about this wallet is its ability to send location-based notifications. Say a customer is near your store and they have a voucher or gift card for you stored in their wallet, Google Pay™ will remind them of this. So what could have become an expired opportunity for discounts becomes a valuable transaction.
Samsung Pay is a payment method owned and controlled by Samsung, built on the tokenisation specifications of the payment networks (Visa, MasterCard, American Express). The combination of card scheme tokenisation and device security provided by the fingerprint scanner and Secure Element (hardware chip in the device) provide a secure and seamless way to pay.
Conveniently, this digital wallet can also be used to store loyalty cards.
WeChat Pay is a digital wallet, born out of the eponymous Chinese superapp, WeChat, and currently boasting over 1 billion monthly users with Chinese bank accounts. Now an ecosystem built for chatting, browsing items, and paying – all in one place – WeChat Pay can be used in-person as well as from desktop-to-mobile by scanning a QR code.
What was once a messenger service has now become a vital payment method for businesses looking to cater to Chinese shoppers, both at home and abroad. In Australia, it's a great choice for luxury brands, restaurant chains, and any other businesses that attract visitors from the Chinese market. It supports 25 different currencies, making it ideal for expansion as well.
Attract Chinese shoppers
It's important to keep non-Australian consumers – residing in Australia, visiting, or shopping online – in mind when it comes to offering an equally appealing payment journey. Luckily, there are some key players in the wallet world that stand out from the crowd, and are definitely worth integrating.
Alipay is the most widely used third-party online payments service provider in China. Available to individuals only, users simply store their debit or credit card details in the app to be used online or in stores via their mobiles.
There are different ways to pay using Alipay. Via Adyen, we provide a dynamic QR code that already contains all the information like pricing for the shoppers to scan, or they provide their own for a cashier in store. Keeping that in mind, it’s a good fit for B2C businesses and it has over 800 million active users globally – not bad if you’re looking to attract a bigger audience.
You can accept any wallet with Adyen – we’re always ready with the latest payment method to plug in and play for your business. Our one-platform approach makes the entire process, from implementation to action, easier and quicker than if you were to launch a digital wallet alone. Benefits differ per wallet, but in every case, we focus on what we do best – payments – and let you focus on your areas of expertise.