Even if you don’t accept them in your own business (yet), you’ve likely seen someone pay with a digital wallet. This completely contactless payment method allows people to store credit and debit cards as well as tickets, coupons, and more.
While digital wallets seemed questionable in the early years, they’ve become increasingly popular thanks to their ease and convenience. Still, it's important to understand this technology before you agree to accept it as a form of payment.
Read on to learn how it all works and whether it's worth it for your business.
What Are Digital Wallets?
Digital wallets are a type of payment method that can securely store digital versions of credit and debit cards. Technically, the digital wallet itself is a type of financial transaction application that exists on a mobile device, though you can also log into it on computers.
Digital wallets allow customers to pay with their phones rather than carrying physical credit or debit cards around. They can also store virtual currency, which works similarly to an ACH transfer, and allows a person to pay cash.
Additionally, a person may store gift cards, loyalty cards, membership cards, plane tickets, coupons, event tickets, identification cards, car keys, and hotel reservations in their digital wallet.
How Do Digital Wallets Work?
When a person sets up their digital wallet, they enter their card information into the digital wallet app. They can also enter their bank account information and use their account funds like cash. Once entered, the app encrypts the information. To use the digital wallet, the owner must authorize its use, typically by unlocking the device or the app itself.
Digital wallets use a variety of wireless capabilities, like magnetic signals, Bluetooth, and wifi, to transmit payment information from the mobile device to the point-of-sale system. There are a few ways a sale can occur.
A customer can pay in person by authorizing the digital wallet and then hovering their mobile device near the card reader, which triggers the transmission of information. This works thanks to magnetic secure transmission (MST), which is the same technology that magnetic card readers use to read swiped cards. In this scenario, the phone creates an encrypted field for the point-of-sale system to read.
Another in-person option uses near-field communication (NFC) technology. This allows a person to link two smart devices, as long as they are within half an inch of each other, and transfer information via electromagnetic signals. Customers can also pay with digital wallets online, a process that essentially transfers payment information like any other online payment.
Finally, QR (quick response) codes allow users to use their device’s camera to scan a code, which then initiates payment. QR codes are a type of barcode that stores information, like where to send a customer who wants to make a purchase. From this point, the transaction proceeds as it normally would through processors, gateways, and so on.
Examples of Digital Wallets
Google Pay and Apple Pay are the most common and popular examples of digital wallets. However, there are many other trustworthy options that you may consider offering as a business owner, including:
- Cash App
- Samsung Pay
- Walmart Pay
How Can Your Business Accept Digital Wallets?
You can easily start accepting digital wallets with Pay.com. As a payment service provider, Pay.com makes accepting payments easy. You can choose from a variety of payment methods – including digital wallets, credit cards, and debit cards – and add them to your website with just a few clicks.
It’s all done on the Pay Dashboard, which also allows you to send direct payment requests called Pay Links or manually enter payment information. You can also track payment status, review analytics, and more.
Pay.com takes security seriously. It has Level 1 PCI DSS compliance, which is the highest level of security that depends on regular independent auditing and testing. Pay.com also tokenizes credit card details in transit and supports 3D Secure 2.0 (3DS2), which adds another layer of authentication to ensure that the person making a purchase is the real cardholder.
The Bottom Line
More and more customers prefer to use digital wallets thanks to their convenience and security. In fact, some people no longer carry their physical cards and instead assume that retailers will accept digital wallets. With this in mind, it’s important to offer this as a payment option to ensure you don’t miss out on any sales.
If you’re ready to begin accepting digital wallets, Pay.com makes it easy. You can set up your account, create a customized checkout page, and add payment methods in just a few clicks. Pay.com is a simple, fast way to accept payments online. Get started now.