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17 Mar 2022

The rise of Digital Wallets — a faster, frictionless and safer way to pay

The thought of making purchases using your phone might once have felt like something out of science-fiction. But now that’s not just a reality, it’s everyday. Over a quarter of all UK payments are contactless, and retailers across the board are adopting tap-and-go payments to cater for mobile. Digital wallets aren’t just coming – they’re already here.

Consumer trust and adoption is growing all the time, particularly in the last two years, since the pandemic has forced cash to be a thing of the past. And as the use of digital wallets becomes ever more mainstream, innovators who issue cards, virtual or physical, must take a lead on this trend or risk being left behind.

Secure, convenient, frictionless

According to Capgemini’s World Payments Report, 35% of customers tried adding a card to a digital wallet for the first time in 2020, and it’s easy to see why they’re gaining  popularity. With your cards stored in one place on your phone, they present a hassle-free payment option, as fast and seamless as tapping your contactless card. And while in the online world there are worries around hacking and security, digital wallets are protected by some of the most robust encryption going.

But the convenience of digital wallets goes a long way beyond giving people more ways to pay for everyday items. Take the world of lending, for example:

Normally when a person is approved for a loan it comes either via a bank transfer or a physical card loaded with the funds. If it’s provisioned via a physical card there’s a delay there while the card is produced and shipped. And while a bank transfer is quicker, there’s an element of risk in that the recipient could be granted a loan for a specific purpose but spend the money elsewhere.

With a virtual card the loan can be delivered instantly and locked to specific vendors. This not only improves risk management but offers opportunities for hyper granular incentivisation. And when Apple Pay and Google Pay is an option – as it is with Weavr – those virtual cards can be loaded straight onto a device and used for physical store purchases as well as online.

Let’s say you approve a loan for a student to buy a laptop for their studies. With a virtual card added to the Apple or Google wallet on their phone, you can specify where that card can be used, and the student can either go online or into a physical store to make the purchase then and there. It’s instant, convenient and safe for both lender and spender.

Customer experience that cuts through

The platforms that issue virtual or physical cards will be defined by their user experience. If you can create a frictionless journey between the moment a user needs a card and the moment they’re using it via a digital wallet, your speed and ease of use will go a long way to driving customer retention.

For example, digital wallets have the potential to be a game-changer for managing business expenses. Convenience and flexibility are at the top of the list here. Like with lending, businesses seek the control that comes with virtual cards, since the system can’t be abused. But employees need an option that allows them to pay for physical expenses like food or fuel, not just ones bought online.

With a digital wallet and the ability to load virtual cards to Apple Pay and Google Pay, they can get the best of both worlds. Employers can set merchant limitations or provisions for how much of an employee’s expenses can be spent on certain items, while employees have the freedom to make purchases online or in a physical setting using their phone.

Seamless integration supports innovation

With digital wallets predicted to account for half of consumer spending by 2024, any business that chooses not to offer this capability is missing out on a huge chunk of the potential market.

Innovators will have to ensure they’re riding at the front of that wave to continue offering their customers the frictionless, fast and secure service they’ll come to expect.

For instance, Weavr powers the 11Onze banking super app, El Canut. With Weavr’s embedded finance system behind it, 11Onze are able to issue their users with a European IBAN and offer a single, simple way of managing all payments, transfers, savings, loans and accounts within the same app – a wallet of wallets as their Chairman James Séne calls it.

With Weavr’s plug-and-play embedded finance solution, innovators are not only able to issue cards, but add them straight to their users’ digital wallets for fast and easy use too. Together with the power of virtual card schemes, this functionality gives innovators the scope to provide greater personalisation and flexibility, and set their platform apart with a customer experience that can’t be matched.

Embedding financial services into your marketplace has never been simpler. With Weavr’s revolutionary plug-and-play embedded finance solutions, you can easily, quickly and safely integrate finance features such as cards, accounts and IBAN’s into your UX and workflows, for a seamless customer experience that directly enhances your offering.

Talk to us about embedding finance into your business.

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