Remember the days when PayPal was the closest thing we could relate to digital currency? Well, those days are far behind us now. The Tsunami of devices that run on concepts like cross platform communication, IoT, Cloud Computing, etc. have brought about a huge change in the way we make commerce transactions on a day to day basis. Go ahead and check your pockets, not many of us have any real cash or cards on us anymore, Do we? The reason behind that are Digital Wallets!
Digital Wallets have taken the world by a storm. Just to put things in perspective, PayPal, the oldest online payment systems (Digital Wallet) company has gone from $250 million in transaction value in the year 2008 to $65 Billion in the year 2015.
But, what are these Digital Wallets?
A Digital Wallet is a device or a property that allows you to make an electronic commerce transaction. Confused? In simple terms a Digital wallet is anything that allows you to exchange money without having to actually use a card or cash, for example, your smartphone or your smartwatch.
In the year 2012 Apple took the concept of Digital Wallets to the next level by introducing Apple Pay and then followed a spree of company that launched their apps and devices for digital payments, making Digital Wallets one of the fastest growing businesses in the world. Statistics show that since the early days in 2012, the total value of transactions made through digital wallets went up from $15 Billion to $130 Billion in 2016, and that’s not all, the numbers are predicted to go up to $324 Billion by the year 2019. That is almost 8X faster growth rate when compared to credit and debit cards during their launch in the market. Fascinating right?
How Are They Growing So Fast?
The key to their growth could be these…
Ease Of Access
Digital Wallets offer a direct solution to all the First World Problems you face as a consumer, like, too much cash in the pocket or too many card in the wallet. Well, with Digital Wallets you can not only have all your cards consolidated in one place, you can do so securely! Most of the people today have an affinity towards online shopping and in some cases are forced to pay with their net banking or credit card details, like while booking a cab or subscribing to music streaming services online. Having a Digital Wallet in such cases makes a lot of sense for people as it is an option widely accepted by all merchants today.
Security offered on Digital Wallets is a catalyst for acceptance. Wallets like ApplePay, AndroidPay and SamsungPay for instance, use bio metrics to confirm payments while some of the others like Citipass (an app based wallet) use a 2 step authentication method, making Digital Wallets a really ease and secure way to pay.
Digital Wallets can be widely categorized into 2 major types, Device based wallets and cloud based wallets. Apps like Citipass, Paytm, Mobikwik, etc. fall under the category of cloud based wallets which store your data on servers making it accessible on multiple devices at your convince making it ease to pay with no hassles. Device based wallets like ApplePay, AndroidPay, SamsungPay, etc. however, offer the option to store consolidated information of all your credit and debit cards right on your devices.
Not just that, the diversity of wallets is so wide spread that there is a wallet to suit the needs of almost all individuals around. Like for example in countries like the U.S, U.K or Australia where cards are the dominating way of paying at merchants and online you have the device based wallets that help you keep all those cards in one place at all times. Where as in countries like India where psychologically people like to see a big number in their accounts you have pre-loaded cash wallets like Freecharge, Paytm, etc. This diverse reach makes them almost invincible in the days to come.
This part is a huge add on to why Digital Wallets are being used more and more in the current market. Almost every merchant present in the current market is now taking the aid of a Digital Wallet for enhancing their business. Take Uber’s case for example. The company had very little business when they launched their service in India, the main reason for that was they only operated on the credit card basis, which meant if you didn’t own a credit card you cannot take an Uber. Things changed for the company as soon as they got into a partnership with Paytm. Offering customers a different way to pay was a great advantage for them and a huge improvement in their business. A good majority of people today in India take an Uber and pay for it through their Paytm accounts. Soon Ola cabs came into picture and realized that Digital Wallets do work! result, Ola Money.
Looking at the picture on a global level. In the year 2012, NFC based payments were pretty much only made through ApplePay. There were about 2200 store and only 4 Banks supporting it in the U.S that support NFC payments through ApplePay, fast forward to 2016, there are Wallets like SamsungPay, AndroidPay and AliPay, ApplePay itself is now available in 50,000 global Stores and 100 brands online and offline and is spread across to the UK, Canada, Australia, France and Hong Kong and is globally supported by almost all major banks. This goes to show the forest fire like growth in the way people like to pay these days.
So, Are Digital Wallets Really Becoming Our New Way To Pay?
Yes, the era of cashless payments is truly upon us. In the last year and half over $1.5 Billion have been invested in companies that make Digital Wallets, both device based and cloud based in India alone. Let’s the example of Paytm in India, from the year 2014 to 2015 the company has seen a growth in it’s user base from 12 Million to 100 Million! and globally companies like Apple, Google, Alibaba, etc, have constantly been investing in taking Digital Wallets to pretty much all the interactive platforms possible and not restrict it to just your phone. With so much work being put into them Digital Wallets really have a bright future ahead of them.
This really is a good time to walk around with empty pockets.
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