Why Start-ups Should Embrace e-Wallets from Day One

Digital wallets make it easy to complete transactions at the touch of a smartphone button.

If you did a straw poll right now to see how many people didn’t carry cash in their wallet or purse, you would find the percentage is far higher today than it was a decade ago. One of the primary factors in the declining need for cash in our back pockets is the rise of e-wallets. E-wallets, also known as digital wallets, are fast becoming the go-to payment method for seamless, convenient transactions for consumers, wherever they may be shopping.

According to Business Insider, mobile payments via e-wallets will total $503 billion in the U.S. alone by the turn of the next decade, with several nations already well on their way to becoming cashless societies. An e-wallet account is designed to digitally mimic the operation of a physical wallet. Aside from fiat currencies, e-wallets can also store data regarding your credit cards, bank accounts, and even loyalty points. It’s therefore important for entrepreneurs and start-up businesses to quickly get a handle on the concept of e-wallets, and reap the benefits both to your business and its customers.

You will probably be surprised to read that the first notion of e-wallets was not mooted during the “Dot Com” boom. In fact, the concept of e-wallets dates back all the way to 1983. A US-based cryptographer, David Chaum, created digital cash over three decades ago. However, it wasn’t until the late 1990s when technological advancements helped bring e-wallets into the mainstream.

PayPal debuted back in 1998, founded by Max Levchin, Peter Thiel, Luke Nosek, and Ken Howrey. From June 1999, PayPal customers could send money to one another via mobile phones, pagers, and Palm Pilots. Fast forward to the present day and PayPal is now a mainstream e-wallet platform, with the e-commerce industry making it easy to use PayPal accounts to buy everything from takeaways to clothing. Of course, there are some industries where PayPal payments are not as common as you may think. In the world of iGaming, casinos that accept PayPal are few and far between, despite the convenience of instant deposits and withdrawals. Meanwhile, the number of cryptocurrency exchanges that accept PayPal deposits to buy and sell the likes of Bitcoin and Ethereum are also limited.

The advent of smartphones meant that additional digital wallets became influential among millennials and other tech-savvy generations. Google Wallet and Apple Pay cemented their place in the digital wallet space in 2011 and 2014 respectively. By 2016, more than half (54%) of consumers surveyed had used e-wallets on their smartphones via applications to make a transaction.

Now that you have a greater awareness of the e-wallet landscape, let’s take a look at how they can benefit fledgling start-ups.

Removing barriers during the checkout process

Ultimately, giving your customers the option of paying for your products or services via e-wallet helps to streamline the checkout process. It removes the need for consumers to punch in debit or credit card numbers, nor do they need to fill out unnecessary forms. Providing buyers have the funds loaded into their digital wallet, they can tap, scan, or hit the “buy now” button and complete the checkout process instantaneously. Removing checkout barriers is vital for start-ups looking to generate early income and turn initial customers into brand advocates.

Keep consumers better-connected to their personal funds

Today’s consumers don’t want to the hassle of owning, storing and using credit cards and worrying about their credit scores. E-wallets give people the ability to stay in total control of their personal funds with up-to-the-minute updates on their available balance and total transparency on all transactions. Millennials don’t feel the need to rely on banks, and with an e-wallet, it’s easier for new-age consumers to stay connected with their hard-earned money.

Real-time data fosters customer segmentation

The instantaneous, always-connected nature of e-wallets can also be utilized as an effective marketing tool for start-ups. Digital wallets give start-ups access to data they would never have otherwise, such as a customer’s shopping preferences and history. Over time, this allows new businesses to segment existing and prospective customers to tailor products and services based on their past website behavior. With the ability to see customer transactions from e-wallets in real-time, this also makes it easy for start-ups to integrate loyalty and reward programs to entice consumers to become return shoppers.

Ideal for reaching out to millennials

If your target demographic is millennials, embracing the e-wallet era is an absolute no-brainer. It is not just the future of payments, it has already arrived. Millennials crave that payment flexibility and efficiency, with uncomplicated transactions that remove stuffy, outdated checkout processes and allow your consumers to get on with their day. On the flip side, e-wallets make it easier and quicker for start-ups like you to get paid, generating that much-needed cash flow.

Implementing digital wallet payments is not difficult for any start-up business, nor is it expensive. You may even find your existing payment providers are working with e-wallets such as PayPal, Apple Pay, and Google Wallet, making the transition to digital even easier.