The global smartphone user base is projected to reach 5.1 billion users in 2028. In the United States, one of the world’s largest smartphone markets, there are 310 million smartphone users today. The growing use of smartphones is fueling the growth of digital wallets that allow consumers to tap to pay for their purchases. Consumer adoption of this contactless form of payment accelerated during the pandemic and is now a preferred method of payment for many shoppers.
Offering modern payment options to customers is now table stakes for all businesses, including small businesses, to remain competitive in the digital era. Digital payment solutions today are not just for large companies, small businesses can harness the power of digital payment technology to capture share of wallet and create a seamless experience for customers.
Offering tap-to-pay options makes good business sense
Juniper research projects that total spend via digital wallets will exceed $10 trillion in 2025, up from $5.5 trillion in 2020. In the U.S., consumer usage of tap-to-pay options has grown considerably in recent years, nearing an estimated $300 billion across Apple Pay, Samsung Pay, and Google Pay.
That’s not surprising considering a McKinsey survey found that the share of respondents who reported using two or more forms of digital payments has grown rapidly—from 51% in 2021 to 62% in 2022. According to this survey, more than two-thirds of Americans expect to have a digital wallet within two years, and it’s likely that many will hold multiple wallets.
As more consumers make the shift to digital payment, the availability of this option increasingly influences where they choose to shop. A survey by Forbes Advisor found that 51% of people say they would stop shopping with a merchant that doesn’t accept payments from digital wallets. Younger spenders were more likely to take this action with 78% of Gen Zers, 55% of millennials and 52% of Gen Xers saying they have stopped shopping at merchants that only accept traditional payment methods.
Forbes Advisor concluded these findings “suggest that a growing number of consumers see digital wallet payment options as a requirement rather than a preference”.
Benefits accrue from offering digital payment options
Findings from a Small Business and Entrepreneurship Council (SBEC) survey highlight the value that entrepreneurs place on the importance of electronic payments. Among new business owners who started a business during the pandemic, 68% considered access to electronic payments one of the most important tools or technologies in starting a new business.
Adopting digital payment solutions allows small businesses to improve efficiencies, attract new customers and remain competitive in today’s digital world.
Small businesses that take advantage of the frictionless payment experience provided by digital payment options will see faster checkout and reduced wait times for customers. Enhancing the purchasing experience in this way will keep customers coming back, boosting loyalty and customer lifetime value.
Offering these payment options also allows small businesses to align with consumer payment preferences to increase sales and revenue. When Forbes Advisor asked survey participants about their digital wallet usage, 53% indicated they used digital wallets more often than traditional payment methods, such as paying with cash or swiping a physical debit or credit card. Results of the survey also revealed that this is especially true for younger consumers, indicating younger participants are at least twice as likely to use a digital wallet app than older survey respondents.
Small businesses can also benefit from the real-time data generated by digital payments. This data can help business owners analyze best-selling items as well as customer shopping behavior and lifetime value. Insights like these are a valuable tool for optimizing marketing campaigns, shaping loyalty programs and creating personalized offerings.
Selecting the right partner is key
Small businesses may not have the resources or know-how to offer digital payments. That is where fintech entrants into the payment processing space can help. With the right fintech payment processing partner, business owners can effectively harness the power of digital payments to meet customer preferences for frictionless payment options.
A payment processing fintech with expertise in providing scalable solutions tailored to small businesses can offer the training and support business owners need to navigate digital payment technology and solutions. Built on simplicity, these solutions empower small businesses with easy-to-use point of sale (POS) systems that deliver an improved customer payment experience and make managing all aspects of the business easier.
POS technology, which provides the ability to offer contactless payment options to convenience minded consumers, is vital for every small business. So is partnering with a payment processing partner that caters to small business. The right partner can make it easy for business owners to offer secure, seamless digital payment options that help amplify the customer experience to attract and retain customers and significantly increase sales volume.
When it comes to payments, going digital is no longer a nice to have option but an imperative for thriving in today’s digital-first environment. Customers prefer digital payment options and are making their preferences known, voting with their wallets by shopping with merchants that offer these options. To capture share of wallet today, small businesses must adopt payment technology that can help them offer the convenient, frictionless payment options customers want.
Austin Mac Nab is CEO and Founder of VizyPay, a Waukee-based provider of payment technology solutions for rural small businesses across the U.S.