Wallet innovation: three factors for B2C payments success

The financial services market, B2C payments, in particular, has experienced considerable change over the last five years. Technology and a shifting regulatory environment have acted as catalyst for innovation – and they will continue to do so. Amid all this change, however, payments still always follow the same scheme. A payment transaction is created, payment data is sent for authorisation with the issuer, and a response is received via the sender’s acquirer. This is true for any digital transaction, regardless whether it’s account, card or e-money based. If the process in the ‘blackbox’ follows the same logic, what makes the difference to people? What influences customers to choose one payment method over another, considering they have the ability to access several different options? I see this choice as a triangle between convenience, speed, and price. These three factors, well-balanced, have a significant impact on the success of a B2C payment product or service. Ultimately it is convenience and the customer experience that makes the most telling difference, however, in this regard, innovations in the digital wallet space make a telling impact.

Convenience is king

Firstly, I want to start by explaining why security isn’t part of the payments triangle. Instead, security is encapsulated into convenience. The art of engineering strong authentication and authorisation processes into a smooth and quick customer journey is the exact definition of convenience.

We have seen many new payment schemes and services coming to the consumer payments market in the last two/three years. Most, if not all, have been building their proposition around the customer experience. Some have a good balance of the triangle, others less so. This demonstrates that the battle for wallet-share in consumer payments is fought over customer experience.
We have witnessed that many card products and banking services also added customer journey elements, introducing easier ways to authorise transactions, reducing the steps required to initiate payments, making the payment process a simpler and more integrated part of the purchase process.

The role of digital wallets

Since the customer experience is such a critical success factor for any issuer, naturally e-wallets or digital wallets can play a starring role in today’s payments eco-system.

So what are the benefits of wallets for online payments? A wallet is a purpose-built payment product that assumes ‘customer ownership.’ The payment journey is designed by the wallet to replace and streamline the transaction experience, the kind which the customer has when using a card or bank account directly. With a well-designed wallet, the customer buys into the triangle and starts using the wallet as a ‘layer‘, rather than the raw product underneath (ie card).

Wallets are one step closer to customers, a true touchpoint to consumers. They are the layer that can create the envisioned and requested convenient experience and features that merchants require to support them; for example allowing merchants to use the wallet for subscription-based, recurring business models.

Wallets live within the financial eco-system as intermediaries, connecting customer and merchants at the point of transactions via a smooth journey, like a one-tap checkout or a simple confirmation of a push message by the customer to authorise a transaction. They eliminate the need for lengthy data entering and reduce friction. Wallets also introduce additional features and services to the benefit of customers and merchants alike, such as real-time cross-border peer-to-peer transactions or the ability to stretch payment acceptance across different shopping channels. Another core-feature is to keep sensitive data concealed during a transaction, reducing data exposure and the risk of theft/fraud. Wallets can also offer payment indemnification to the merchant and transactional integrity can be increased by the ability to match and validate certain data points between wallet and the customer data held by the merchant.

Digital Wallet schemes often operate globally, and therefore play an important role by managing and patching the fragmented global banking and payments infrastructure by spanning their functionality across many features and services within one product. It’s a ‘duct-tape’ product. Front-side, it offers simplicity, while being feature-rich and convenient. Backside, it sorts the plumbing – by taping together a fragmented world of banking and payments. Wallets allow merchants to implement a holistic customer journey, based on one payment service, globally. The wallet serves as a turnkey solution, managing the underlying payment schemes, risks, contractual relations, and fund flows.

At MuchBetter we designed a wallet that balances customer and merchant benefits, introduces a simple yet secure payment process, and allows payments in any situation, online, in-store between individuals or global remittances. The ability to communicate to merchants and customers, both connected to our wallet system via our smartAPI, makes MuchBetter a global, digital wallets service for many different merchant industries.

About Jens Bader

Jens has a rich management background with more than 20 years of experience in the online and mobile payments industry. A seasoned commercial leader, Jens recently co-founded MIR Limited, an FCA-licensed Fintech group that develops and operates second-generation electronic money services assisting on- and offline merchants. Jens is a frequent speaker on payments and fraud-related topics worldwide.

About MuchBetter

Operated by MIR Limited UK, an FCA-licensed and regulated e-money issuer, MuchBetter is the new payment application for iGaming and marketplaces. Available on Android and iOS, MuchBetter allows effortless online, offline and contactless payments, around the globe. MuchBetter’s unique commercial models increase operators and merchants’ revenues while its anti-fraud features and use of best in class technology eliminates payment risk whilst creating a convenient payment experience for customers.