Digitalwallets are gaining popularity all over the worldand within the payment sector, it is increasingly being offered as a new product feature for cross border transactions. Very common in peer-to-peer payments, digital wallets have become a bridge to those without bank accounts.In the context of cross border environment, however, no single digital wallet is currently as widely accepted internationally as major cards such as Visa and Mastercard. Most digital wallets also do not incentivise customers or merchants with reward programmes as most traditional debit or credit cards do.
Acceptance is evidently a challenge in cross border payments.Merchants who don’t accept local or the most popular payment method from different market can find themselves losing out on customers which prevents them from growth.Payment landscape in any market is so diverse and filled with so many players offering alternative payment solutions. This is a trend we expect to see in the future as online payments continue to prevailand for a merchant to be successful, they need a payment solution that offers flexibility and a network of different local payment methods to be able to solve a complex payment environment.
Some payment solutions providers have already made efforts to address this challenge.AstroPay, for example,offersa digital wallet that is free to download and register, allowing users to perform cross border transactions with no extra charges.Cross border acceptance is simplified by providing a single API for accepting transactions and receiving funds, thus enabling easier and faster pay-ins, check-outs, bank transfers or recurring direct debits without having the customer to leave the merchant’s website. With this system,AstroPayhelps merchants scale up their business by securing more conversions and expanding the range of consumer base they can reach thanks to the network of more than 200 payment methods accepted.
Future of digital wallets
Previous studies have shown thatthe use ofdigital wallets improvesthe rate of acceptance of foreign payment methods and networks around the world,thereforemaking cross border payments faster, moreaccessibleand cheaper than traditional bank transfers.In additional to facilitating online payments, digital wallets make it easier for customers to receive, pay and deposit money. It also allows merchants to have a larger reach of global customers and make payments easier,fasterand more accessible.
We see an exponential growth in the demand of small and large businesses, including e-commerce and gaming businesses who are keen to accept digital wallets. Worldpay’s Global Payments Reportindicates that half of all e-commerce transactions made globally are expected to be made with a digital wallet by 2023. This shows how digital wallets play a vital role in propelling non-cash transaction and growth of e-payment methods.
Digital walletsalso help increase customer loyaltythrough loyalty programmes and personalisation. They work byrewarding customers who repeatedly interact with a brand, whether it be transaction, newsletter signup,membershipor engagement on social channels.They are part of user experience and therefore digital wallet isan excellent way of spurring consumers into action as the platform is already built for ease and convenience.In our experience, users tend to prefer what is called as point-based loyalty. Points programmes are the most common type of rewards programmes. Theylet customers accumulate points they can redeem for freebies, cashback, perks, etc.Customers feel recognised and special with loyalty programmes embedded in the digital wallet, which further leads to more purchase, deeperengagementand direct feedback for the brand. It is also a way of generating trust between merchant and the customer.
In this competitive marketplace, payment providers have turned to the latest digital innovations to transform cross-border payments and more global merchants are turning to their fintech partners for solutions that make payments more convenient. Digital wallet providers can offer solutions without the burden of complexprocessing,so merchants have greater access to faster settlement and global consumer reach. As opposed to using traditional bank or wire payments, merchants can leverage digital wallets to make cross border transactions happen.
There is also growing demand for real-time payments in the cross-border payments space. By partnering with a global digital wallet provider, merchants can process more payments in foreign currency in real time. In the future, I see cross border payments become settled much faster and more securely with digital wallets. The key for merchants to stay ahead of the curve is to collaborate with a partner who can provide a suite of connectivity and ensure businesses keep up with the rapidly evolving customer demands and characteristics of local as well as global payment landscape.
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