What businesses should know about the latest digital payment methods, including how to start accepting Apple Pay, Google Pay, and other digital wallets.
Over the last decade, payment technology has rapidly evolved, becoming faster, smarter, and safer for both merchants and consumers. Nearly half of consumers made the switch to contactless payments during the pandemic, according to a Mastercard survey. That number is expected to skyrocket in the coming years, particularly as financial institutions continue to roll out NFC-enabled debit cards and credit cards.
While the growing interest in contactless payments likely comes as no surprise to many U.S. merchants, there are other consumer preferences helping to drive this growth — ones that both online and brick-and-mortar retailers should be prepared for.
The Rise of Digital Wallets
According to a study conducted by eMarketer, an estimated 51% of U.S. smartphone owners will use digital wallets by 2025. As of 2021, digital wallets like Apple Pay, Google Pay, and Samsung Pay were used by 101.2 million Americans over the age of 14 — up from 92.3 million in 2020.
Even with the growing popularity of digital wallets, only four in 10 retailers currently accept digital payments. For many customers, this may prove to be a sticking point — 84% of consumers surveyed by Mastercard say that they expect to be able to make purchases when and how they want.
What’s driving this growth?
While the pandemic spurred an increase in digital wallet usage due to health and safety concerns, there are other factors at play, such as convenience. Not only do digital wallets enable consumers to reduce the number of cards they carry, but they can also serve as an alternative form of payment at times when an individual doesn’t have a physical payment method on hand.
Another key benefit that appeals to both customers and merchants alike is increased security. Rather than sharing a user’s credit or debit card number, digital wallets rely on tokenization, which generates unique codes for each purchase made. This helps ensure that if a merchant is hacked and payment data is exposed, customers’ actual debit or credit card numbers aren’t compromised.
For both merchants and customers, digital wallets offer another compelling benefit: speed. Most payments made through digital wallets can be completed in just a few seconds. Ultimately, this can help improve customer experience by reducing wait times at checkout, while simultaneously making the process easier for employees.
Other emerging payment methods
While Apple Pay and Google Pay remain the most popular digital payment option for U.S. consumers, QR codes are growing in popularity in many parts of Asia, Latin America, the Middle East, and Africa. In the U.S. QR payments are most commonly made using peer-to-peer payment apps like PayPal and Venmo, making them an attractive payment method for unbanked or underbanked consumers.
Consumers are also increasingly interested in using cryptocurrency as a form of payment, with 40% planning to use it in 2022. While Bitcoin, Ethereum, and other forms of cryptocurrency are becoming increasingly mainstream among consumers, the U.S. Chamber of Commerce advises merchants to proceed with caution before accepting these digital currencies as a form of payment.
How to Start Accepting Digital Wallet Payments
Wondering how to start accepting Apple Pay, Google Pay, and other digital wallets? The answer will depend on one key factor: The type of point-of-sale (POS) technology you’re currently using.
If you’re a brick-and-mortar merchant and are already using an NFC-enabled terminal or another type of point-of-sale technology that enables you to accept contactless payments, here’s the good news: You’re already equipped with the technology you need to begin accepting Apple Pay, Google Pay, and other types of digital wallets. To ensure a seamless experience for your customers, make sure your staff is properly trained on these payment methods and how they work.
If you’re still using an EMV or chip-and-PIN terminal, however, you’ll need to upgrade your POS technology in order to start accepting contactless payments.
For more on the latest in payment technology, including smart terminals and other payment solutions designed to help you grow your business, explore Regions’ payment solutions.
