Good News for Retailers: Digital Wallet Usage is Growing

The pandemic has affected all our lives in many ways, including the payments industry. One big change: In 2020, global digital wallet usage surged three years ahead of expectations. For shoppers, that means more ways to pay online and in store. For retailers, it means it’s time to get on the touchless digital payment bandwagon. This is how your customers now want to pay, and if you can’t accommodate them, they just might shop elsewhere.

PaymentsJournal wanted to learn more about why and how retailers should add digital wallet capabilities for in-store purchases, so we sat down with some experts. The following are highlights from our conversation with Tristan Roffey, VP of Strategy & Digital Innovation at Blackhawk Network, and Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group.

Digital wallet stats tell the story.

According to Blackhawk Network’s recent Global Digital Payments Insights report, 2020 saw big changes in digital wallet usage. They surveyed more than 13,000 consumers across nine countries and found the following:

  • 59% of respondents started using, or increased their use of, digital wallets since the pandemic began.
  • 17% of respondents used a digital wallet for the first time.

“Not only are there a lot more consumers using digital wallets for the first time,” said Roffey, “but the consumers that were using them prior to the pandemic are now using them more frequently.” Although there still some lack of acceptance among consumers, Roffey added, we are finding that when they use digital wallets, consumers are spending more.

This, of course, is very good news for retailers.

The QR code is back.

Before the pandemic, QR codes seemed like old technology in the US, and had very little traction. Today, they’ve found all kinds of uses, from touchless restaurant menus to digital payments at the grocery store. In fact, the utilization of the familiar QR code has been a major contributor to the increased adoption of digital wallets and digital payments.

The growth of digital wallets isn’t just a fad, either; digital wallets are here to stay. “Consumers who don’t consider themselves to be tech-forward are finding value in digital wallets for eCommerce and in-store,” said Grotta. “That’s when you know you’re moving into mass adoption.”

Adoption on the retailer side is growing just as quickly. As Grotta added, “It’s really winning over both large and small merchants. And that’s really helping to lay the foundation for fast growth.”

It’s what consumers want.

Though retailers were quick to respond to changes resulting from the pandemic (curbside pick-up, senior shopping hours, etc.), the true drivers of change were consumers. They quickly adopted many of the quick, smart and safe purchasing tools presented to them. Roffey is not surprised. “There are a million reasons people like paying this way. It’s cleaner, faster, safer and better. So, once you’ve become accustomed to it, there’s really no going back.”

Consumers are also enjoying having this larger number of payments options-and have grown to expect them. “There’s actually some data to suggest that if a merchant isn’t offering their consumers a contactless payment experience, there are some consumers that just won’t shop there anymore,” added Roffey.

With almost 100% of North American consumers owning a smartphone-able to facilitate transactions wherever they are-it’s time for digital wallets to become a primary in-store payment option for consumers.

"This year and next year are really going to be building years for mobile wallet acceptance in-store,” said Roffey. “This is something that’s really going to take off."

There’s more good news for retailers.

For retailers, providing digital wallet payment options in-store is a lucrative choice. According to the Blackhawk Network survey:

  • 43% of respondents reported shopping more often since they began using a digital wallet.
  • 38% reported spending more money at retailers where they can use digital wallets.

Digital wallets are more than a convenient, safe way to pay. They enhance consumer-retailer engagement in a number of ways, helping to drive merchant awareness, customer leads and promotional opportunities. For example, after Giant Eagle became the first US grocery and convenience store chain to accept PayPal and Venmo in store (thanks to their partnership with Blackhawk Network), they made sure their customers were aware. They also offered a $10 bonus to anyone spending at least $40 at Giant Eagle using PayPal or Venmo.

"If merchants aren’t accepting these digital wallets, not only are they losing out on the traffic that can be generated by these digital payment methods, but they’re also missing out on a considerable amount of promotional dollars,” said Roffey.

Implement right, and do it right now.

So, what’s the best way for retailers to implement digital wallet payment options?

First, it’s crucial to have the right infrastructure in place. Retailers must have the right technology, of course, but it’s just as important to consider training and education for cashiers at the point-of-sale, as well as clear marketing materials that drive in-store awareness. After all, need to know about these new payment options or they won’t use them.

While these steps may seem daunting, industry leaders such as Blackhawk Network are eager to step in and help retailers implement and optimize their digital wallet capabilities.

"We’re here to guide merchants along their journey to ensure they’re maximizing the benefit of these new payment methods while minimizing any disruption to the stores and making that experience as great and manageable as we possibly can for the consumer,” Roffey concluded.

Listen to the podcast.

To learn more about the state of digital wallets and how they benefit both consumers and retailers, listen to the entire PaymentsJournal podcast here.

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