Digital Wallets - 5 Questions On E-Wallet Services For Business - Seitatech

1/31/2019 Digital Wallets: 5 Questions on e-Wallet Services for Business • Seitatech.
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Digital Wallets: 5 Questions on e-Wallet Services for

Business
 27/11/2017  by Toomas Selkänen
Digital wallets are hardly a novel innovation. Though, it is only recently that they have seen more
widespread adoption in the Finnish market. Especially mobile wallets have seen a surge in usage as
of late.
Apple Pay made its Finnish debut at the end of October and MobilePay is being pushed into the
point-of-sale with gusto.
http://www.seitatech.fi/en/digital-wallets-5-questions-e-wallet/ 1/10
In addition, the store speci c payment apps are growing more common by the day. As an example,
Hesburger and EspressoSERVICES SEITA
House have both Academy
invested COMPANY
in mobile BLOG byRECRUITMENT
wallet development combining a
payment functionality into their loyalty app. CONTACT US Suomeksi
It is high time to start familiarizing yourself with the opportunities that growing mobile payment
adoption brings to the table. This article will go through the essential questions you need to answer,
before any investments into digital wallets. 

1. WHAT are Digital Wallets?

At the basic level, digital wallets are device speci c or cloud based applications that enable digital

transactions. This transaction could be for example an online purchase, a contactless payment with
your phone, or a MobilePay transfer to your friend.

In addition to funds, electronic wallets are able to store various other information, such as payment 
details, passwords, and even tokenized credit cards.

Electronic wallets can be roughly divided into two categories:
1. Cloud based wallets, which are created for purchases made form speci c companies. Brand
speci c mobile applications, such as Espresso House’s “Coffee Card” and payment systems of
larger online retailers also fall into this category.
2. Digital wallets tied to the consumer device, which are used for general payments and
transactions, either online, o ine, or in-app. This group includes most e-wallets utilizing tokenization
and NFC, like Apple Pay and PiVo, as well as online wallets like Paypal and Masterpass.
Even within these categories, there can be notable differences in tech and functionalities, but the
main objectives of the wallets are very similar: Make paying faster, ease customer authentication
and improve data security.
Many wallets also take advantage of functionalities from both categories.
In consumer’s mind, an e-wallet is usually seen as the latter, alternative payment method. Both
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implementations do bring new value toSEITA Academy and
both customers COMPANY
merchants. BLOG RECRUITMENT
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2. WHY are e-Wallets an Important Part of my Payment

Services?

An electronic wallet can improve your customer experience in many ways. This will culminate in

higher conversion rates for eCommerce and improved service in brick & mortar.

The ability to automatically store and ll customer information is an excellent way to speed up
remote payments, both online and in-app. 
In conventional stores, mobile wallet users gain an access to higher purchase limits compared to 
contactless cards as well as money transfers between users.

Electronic wallets also improve payment security. This is a very welcome addition to eCommerce, 
where online payment fraud and false positives are a source of tremendous losses for online
entrepreneurs.
Smartphone working as a “key” brings additional safety to online transactions. Also, tokenized credit
cards make it easier to authenticate legitimate customers.
The security layer created by mobile wallets bene ts all parties.
Currently, instead of the retailer, customers may choose to hand their personal information to a 3rd
party wallet, which handles their encrypted transmission. This allows the seller to only store
information necessary to marketing efforts, which will be a great relief after the GDRP regulation
comes to power.
As the security and speed of payments improve, the conversion rates of ecommerce rise in
conjunction.
This, in addition to improved service in brick & mortar stores, is a good motive for retailers to adopt
new wallet technologies, highlighting how customer view of payment security can reinforce
purchase decision.
3. HOW do electronic wallets change payments?

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Electronic wallets enable many new functionalities to augment your payment services.
Server-side wallets let you take advantage of new customer data. Improving the buying experience,
marketing targeting, and accelerating the payment become possible, thanks to wallet technology.

Different loyalty programs are also a good way to take advantage of the new technology.

Another bene t brought by digitalization is the gradual shift from physical receipts to electronic 
ones. Warranties are notably easier to handle when receipts are safely stored in digital wallets.

This kind of trend also makes it easier for consumers to track their expenses. It will be interesting to

see how widely PSD2’s account information services will be adopted to banks’ own mobile wallets.

Electronic wallets also enable many value added services. Examples of such functionalities include:
Electronic loyalty cards, various promotions, larger contactless payments, event schedules, service 
personalization, and localization of purchase.
Some digital wallets are de ned by the communities that have grown around them.
Nordic mobile wallets have roots in consumer money transfers, which has caused small “fan clubs”
to form behind speci c applications. This is a natural development, as all users bene t from wider
adoption.
The situation is likely to change, when mobile transfers will work between different wallets.
Automatia’s Siirto network is a good step towards this direction. It is a shame though that
connecting all services to this network has been unsuccessful as of yet.
4. HOW do I Make Online Wallets a Part of My Business?
Adding a server-side digital wallet as part of an organization’s services is not the simplest task. This
is due to the abundance of options, service providers and technologies competing for your attention.
You need to decide, which payment methods to accept, should the wallet be built from ground up, or
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is a premade option enough to t your SEITA Academy
requirements. COMPANY BLOG RECRUITMENT
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Add this to the wide range of service providers and you end up hard pressed to make an educated
choice. It doesn’t help that every new feature involves additional work and expenses.
Digital wallets are very malleable. Only your imagination (and budget) is the limit when building a 
new wallet. The chosen features can range from contactless payments to marketing analytics, and

from inventory management to risk management.

At the very basic level, retailer’s electronic wallet is “just” a web-application that accepts card
payments. 
At the other end of the spectrum, there are the mobile wallets of large banks’ that are built from 
ground up, or ones customized from existing white-label solutions to t very speci c requirements.

When choosing your approach, make sure to take into consideration the maturity of different 
services. It’s not said that every wallet provider is able to offer equal features or level of service.
At best, e-wallet can solve many problems for your customer. For example, you could take
advantage of electronic receipts to improve your return process, or make your payment service
support recurring orders.
To ensure the best choice of investment, it is critical to understand your customers. E.g. if your
webstore’s revenues come from mostly overseas, support for a very local wallet is unlikely the be a
very relevant feature for you.
When planning your wallet investment, you should ask yourself: “How does the new system help my
customer?”
Highly local payment systems do have their place though. For example, public transit often uses
closed-loop payment systems, where the loaded funds are only usable for speci c trips. Solutions
like this are cost effective to produce, but often fail in retail, due to the di culty of attracting new
users. Many of the successful implementations have been built on an existing application and
userbase.
Wallet investments often carry some risk. For instance, problems could arise if consumers end up
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favoring features or payment methodsSEITA Academy
your service COMPANY
is missing. BLOG RECRUITMENT
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You should be aware that a ton of purchases are abandoned due to lacking payment methods. This
makes it dangerous to opt for the cheapest option for digital payment services.
Online Wallet: 4 approaches to implementation 
Having your wallet service built from scratch is likely to be the best option for bigger players. That is
not to say that there are no sensible solutions for SMEs as well.

1. Premade wallet is the most common way to approach online payments. Most payment service 
providers offer a solution for this, but the functionalities vary wildly, especially when it comes to
utilizing customer data. 
2. White-label wallets are the most cost-effective way to build a service unique to your brand.

Solutions like this are often partly standardized, allowing for personalization in appearance,
functionality, and features, while leaving back-end intact. 
3. mCommerce platforms are often a great choice for a new online merchant. In addition to
payments, they include most functionalities required to set up a mobile webstore. Though, the
services do come in all shapes and sizes, with some even lacking a proper online wallet.
4. Building your own wallet should be considered, when you need features unique to your business,
or you need better control of your customer data. Often the optimal solution to larger
organizations, with budgets suitable to cover the cost of development.
When working towards their own digital wallets, entrepreneurs will have to face many technical
challenges.
The choices are further complicated by the fact that most wallet services have very different goals.
Some are just a place to store credit cards and make contactless payments, with others
concentrating on online checkout, and some only offering transfer of funds between users.
The best solution is always a service that combines these features into an optimal package for your
business. You should also consider how the new wallet will function in the channels your business is
present in.
In brick and mortar for example, you need to prepare for the challenge of combining mobile
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payment system. COMPANY BLOG RECRUITMENT
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When deciding on the wallet service, think about how the mobile wallets will communicate with your
POS -system. For more familiar Bluetooth / NFC setups, it’s enough that your customers have an
easy access to a payment terminal. With QR codes on the other hand, you must ensure suitable
conditions to lm the code. 

You don’t need to be excessively vary of the higher end options either. If for example your
organization already has an existing customer application, it is easy to augment the service with 
wallet functionalities from a third party. This will cut the cost of development considerably.

5. WHAT Will the Future of Digi-Wallets Hold? 
Digital wallets will gradually become more commonplace with both consumers and companies. 
Though, the market is likely to change in many ways during the next few years.

Mobile wallets are here to stay when it comes to eCommerce. In the future, more and more service
providers will include the most common wallets as part of their solution. It remains to be seen,
which wallet services gain enough traction to establish their place in the Nordic payment ecosystem.
We also expect the new mobile wallets to take ground from the old fashioned online banking
buttons. After all, if the customer already needs to authenticate themselves with the bank’s mobile
application, why not forgo the effort and just pay straight from the app?
It will be fascinating to follow; how mobile wallets bring traditional & online retail closer to each
other. Perhaps one day, online payments will be as quick and effortless as contactless payments are
now.
Electronic wallets have yet to reach their nal form, as many development avenues remain
unexplored.
Due to their ability to securely store data, digi-wallets could be used in customer identi cation for
example. Concepts such as; Age veri cation when purchasing restricted products, electronic KELA /
health insurance card in pharmacies, or storage of various loyalty cards within your wallet, would be
good uses for the novel SERVICES
technology. SEITA Academy COMPANY BLOG RECRUITMENT
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In electronic wallet implementations, the nal decisions should be made on the terms of customer
experience. After all, the customer is in the center of any business, making the competition for their
favor an excellent reason to improve your payment experience.

As such, understanding your customer becomes vital, even when planning your payment services.

The most successful implementations will solve customers’ problems and improve their quality of
life. 
Subscribe to our Newsletter to stay updated on shifts in the Nordic payment 

ecosystem.

About the Authors:
Mikko Laaksonen
CTO of Seitatech, with decades of experience in ITM & payment development.

Mikko's technical vision seamlessly combines technology and business goals.

Toomas Selkänen
Toomas is a digital marketing specialist, with a soft spot for payment technology.
He writes on payments industry topics from a layman's perspective.
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1/31/2019 Digital Wallets: 5 Questions on e-Wallet Services for Business • Seitatech.

SERVICES SEITA Academy COMPANY BLOG RECRUITMENT

Digital Wallets: 5 Questions on e-Wallet Services for

Electronic wallets can be roughly divided into two categories:

Many wallets also take advantage of functionalities from both categories.

2. WHY are e-Wallets an Important Part of my Payment

The security layer created by mobile wallets bene ts all parties.

3. HOW do electronic wallets change payments?

personalization, and localization of purchase.

4. HOW do I Make Online Wallets a Part of My Business?

Online Wallet: 4 approaches to implementation 

5. WHAT Will the Future of Digi-Wallets Hold? 

Subscribe to our Newsletter to stay updated on shifts in the Nordic payment 

About the Authors:

CTO of Seitatech, with decades of experience in ITM & payment development.

 Internet of Things Uni es Online & O ine

Internet of Things Uni es Online & O ine Payments 

Developing Technology Makes Paying Easier, while Challenging the Industry 

Digital Wallets: 5 Questions on e-Wallet Services for Business 

Seitatech’s New Payment Terminals & Acquirer Support 

(C) Seita Technologies Oy 2017. All rights reserved.

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