Buying at the store used to mean pulling out a twenty-dollar bill to pay at the cash register. Today, trillions of dollars move around the world, but it's estimated that only four percent of that money involve physical cash. The rest is digital money. Hard currency requires an expensive cash supply chain (think vaults, armored trucks and guards) that costs U.S. businesses nearly $5 billion each year, according to research at Tufts University.
Electronic debits and credits aren't free either since digital transactions require an IT infrastructure to ensure accuracy and security. But digital money does offer efficiency, convenience and modernity to the payment process. Someone may steal cash from your wallet, but it's a lot tougher to steal an electronic password that's supported by multiple security measures.
An integrated and seamless buying experience
Apple, Google, Samsung, Capital One, Wells Fargo and other big players are improving payment technologies to provide consumers with an integrated and seamless shopping experience. These days, it's not just about swiping your phone at the checkout counter. Mobile wallet providers, such as Capital One Wallet, let cardholders can get instant purchase notification on their mobile device the moment their credit card is used; lock their card if misplaced or lost; see their balance as well as digitize receipts and gift cards, all in their smartphone. These features are added to convey compelling reasons to make the switch from traditional payment methods to mobile wallet.
"As wallet technology simplifies the shopping experience and becomes more readily available at retailers, the adoption and usage rates will continue to increase," said Paul Moreton, Capital One Vice President of Digital Product Management. The Virginia-based bank commissioned a study and found that 24 percent of respondents use mobile wallets, and 63 percent of those surveyed have used this technology for less than a year. Also, nearly 70 percent of wallet users say they would use this technology even more if more merchants allowed them to pay that way.
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Swiping is smart business for retailers. A survey by Box Technologies finds that 86 percent of UK shoppers avoid a store if the checkout lines are too long. And 70 percent of respondents say they are unlikely to return to a store if they have to wait for a long time on just a single occasion. Today's shoppers are impatient, and during the holiday season frustrations can reach a boiling point as people compete in the aisles for limited goods. Retailers should consider the long-term implications of incorporating mobile into their business practices. Younger and tech-savvy consumers are much more likely to look at your competitors if you don't let them pay for their goods quickly and conveniently.
Rise in mobile shopping among millennials
This holiday season there's plenty at stake for retailers, including those who haven't installed mobile payment tools at their stores. The National Retail Federation estimates that holiday sales will grow 3.7 percent from last year to $630 billion, and $105 billion of that sum will be spent online. Among millennials, 57 percent prefer to shop online and 43 percent would rather shop on mobile devices rather than in physical stores, according to a survey by PricewaterhouseCoopers.
Depending on your payment provider, mobile wallets can be used to purchase items online. Internet stores that optimize their web portals for mobile users are positioned to improve their sales and conversions during the critical holiday season. According to Adobe Digital Index, more consumers are shopping online this holiday season, up 14 percent from a year ago. And more than half of consumers are expected to use their smartphones to find better deals online, according to Mobile Commerce Daily.
Are physical wallets becoming obsolete? It sure seems that our smartphones are replacing many traditional tools. One thing's for sure: The march towards digital continues, and non-participating retailers risk losing their customers if they don't align their business processes to accommodate tech-savvy and impatient shoppers.
Photo credits: Picjumbo (1st photo); Flickr (commercial use & mods allowed)