Digital wallets are online payment tools, usually in the form of an app. Virtual versions of debit and credit cards are are securely stored in your digital wallet that removes the need of entering your card details or carrying the physical card with you to make payments.
There are several Digital Wallet options such as Samsung Pay, PayPal, etc...but the most popular options are Apple Pay and Google Pay which are now becoming synonymous with Digital Wallet as a term.
- Apple and Google Pay lets users make payments using smart devices such as cell phones, watches, tablets, and more. Apple Pay, for example, is the go-to for iPhone users, while Google Pay is for anyone with an Android.
For Card-Present in-person transactions, users can store their cards in the digital wallet on their phone and use the phone to make purchases between the device and the terminal using Near Field Communication (NFC) technology. NFC is an industry-standard, contactless technology that’s designed to work only across short distances.
For Card-not-Present online payments, users can simply select a digital wallet payment option within the checkout flow and skip manual entry of the card details.
The Benefits of Digital Wallets
There are many advantages of digital wallets that take the friction out of payments for your customers. 80% of eCommerce customers will abandon their cart if they cannot pay with their preferred payment method.
- No more filling in your card details every time you check out online, or fumbling for your wallet at the store.
- Your payment information is saved in one protected, central location.
- The card number is never stored in the app itself, but is instead assigned a unique virtual number. This protects your money even if your smartphone is lost or stolen
Security & Compliance
Digital Wallets are compliant with the latest EMV standards for tokenizing transactions, which leads to a more secure payment experience.
After the customer authenticates the transaction, the Secure Element provides their Device Account Number and a transaction-specific dynamic security code to the merchant’s point of sale terminal or online gateway along with additional information needed to complete the transaction. Again, neither Apple or Google nor the device sends the customer’s actual payment card number. Before the payment is approved, their bank, card issuer, or payment network can verify the payment information by checking the dynamic security code to make sure that it’s unique and tied to the customer’s device.
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