Mobile wallet apps – a promising business niche

Mobile wallet apps - a promising business niche

Every day, more and more people make purchases via mobile devices. This growth has definitely been driven by the increased use of contactless payments during the COVID-19 pandemic but is also very likely to stay. 

People are getting used to handling financial transactions via mobile devices more often than physical cards and mobile wallet applications are becoming more and more popular and convenient digital gadgets. 

This article covers:

What is a Mobile Wallet?

A mobile wallet is an app that can be installed on a smartphone or which is an existing built-in feature of a smartphone. A mobile wallet stores credit card, debit card, coupons, or reward card information. 

The mobile wallet app is basically a digitized version of physical wallets. That is why almost every valuable card stored in a physical wallet can also be stored in the mobile wallet, such as a driver’s license, social security card, health information cards, loyalty cards, hotel key cards, and bus or train tickets.

This model is used by merchants, banks, enterprises, and individuals. The most popular mobile wallet apps are Apple Pay, Google Pay, Samsung Pay, and PayPal. 

How to use a Mobile Wallet? 

Once the app is installed and the user inputs payment information, the wallet stores this information by linking a personal identification format such as a number, key, QR code, or an image of the owner to each card that is stored. Mobile wallets store money transaction records, not physical currency; the software app’s part is to ensure the safety and data encryption of transfers. 

Another example of such a solution innovating day-to-day operations like payment processing or optimizing shopping experiences is Apple app clips technology, which benefits from ApplePay.

The Mobile Wallet Market 

Mobile wallets have increasingly gained market traction amid the ongoing COVID-19 pandemic as the current health crisis continues to keep bank branches closed, pushing customers to seek digital alternatives to fulfill their daily needs.

According to Statista, the use of payment apps like Apple Pay or Google Pay in North America is predicted to double between 2020 and 2025, although Asia’s market size will be significantly larger. These predictions are based on forecasts concerning the value of conducted transactions with this payment technology. 

This has spurred the adoption of mobile wallets as shopping platforms and industry regulators, encouraging the use of contactless mobile payments during the pandemic.

Users shift towards digital payments

The year 2020 has forced sudden changes in people’s behavior and everyday habits, also in the area of finance management. This made personal finance apps ever more important in providing these types of services.  

No wonder that the mobile wallet market is witnessing a dynamic transition in customer behavior, as shoppers are adopting digital payment methods at a rapid pace due to convenience and easy use. 

We are witnessing fundamental changes in customer behavior as people are embracing digital payments and avoiding physical bank branches or ATMs. For example, in the UK March 2020 saw the lowest value of cash withdrawals during any month since 2014. At the same time, Sensor Tower reported 24 billion downloads of finance apps worldwide in Q2 2020. 

The increasing customer preference toward mobile payments has driven major companies into launching solutions such as Google Pay, Apple Pay, and Samsung Pay, and changing the way marketers connect with consumers, creating new avenues for market expansion.

How to create a Mobile Wallet app – a few things to think about 

Your mobile wallet app should be functional and give people what they need – just like every other mobile app. There are a few specific areas we should pay extra attention to before starting the app development process.

 Types Of Mobile Wallets

When it comes to building a mobile wallet app, there are a few things that should be considered first. For example, how the payment process will be managed and to what extent. There are three types of mobile wallet apps, differing in their payment processes.

  • open wallets – used directly by a bank or third party, allowing customers to use the funds in the mobile wallet directly by making payments for transactions or withdrawing cash. The best-known open wallet is PayPal. 
  • closed wallets – linked to specific merchants, allowing customers to make payments only for transactions initiated with those specific merchants. Users can not make any ‘outside’ transactions or withdraw cash. A typical example of a closed wallet is AmazonPay.
  • semi-closed wallets – a hybrid that allows customers to use funds for transactions in multiple merchants, as long as there is some kind of contract between those merchants and the mobile wallet provider. Users can not withdraw cash but are able to withdraw funds directly to a bank account. 

Features Of Mobile Wallet 

Just like while planning to develop any other mobile app, the matter of features should be well thought over in advance.  Obviously, offering customers the best service should be kept in mind, and there are a few core features that simply cannot be omitted. 

The mobile wallet app should have a unique user ID across all payment channels, in order to simplify users’ identification. It also should provide users with linked bank accounts, to allow them to make transactions. It’s good if users can select between various accounts and manage all operations in one environment. 

All functionalities related to money transactions are also a must: users should be able to send money to bank accounts from the application and vice versa and add, receive and transfer money (for example by typing in a recipient number or scanning a QR code). 

When it comes to the matter of dealing with money, providing users with 24/7 support is also a good idea. 

APIs And SDKs 

To reduce the time and money invested in mobile wallet app development, it’s smart to use third-party integration. Implementing ready-made tools and codes might simplify the project and allows for the development of a quality product in a short period of time. Various frameworks, APIs (application programming interfaces), cloud solutions, and SDKs (software development kits) are being used in mobile wallet app development. 

There are a lot of ready API solutions available for integrating payment modes (PayUMoney, Braintree), for social media tools, push notifications, etc. Also, SDKs such as MasterCard Mobile Payment SDKs or PayPal Mobile SDKs help speed up the process, providing a development tools library and testing simulators. 

Security Of Mobile Wallet 

Last but not at all least: Safety comes first. There are many ways to ensure security for mobile wallet app users, from the core outpost like passwords or codes – several, on different stages of working with user accounts – to point-to-point encryption or tokenization. This matter is also crucial for acquiring more reluctant users – they have to be sure that their mobile wallet is safe. 

The most innovative security technologies are biometric protection and recognition, using information about the unique physical features of the users (for example TouchID and FaceID). 

Nonetheless, of the chosen security features, users of mobile wallet apps should also be provided with the possibility of instant mobile wallet blocking – by message, call, or any other way – so they always feel they have control over their finances.

Wrapping up 

Not only customers, but the whole e-commerce industry is starting to depend on mobile wallet applications. The future of those digital gadgets seems optimistic. In an industry that might quickly become competitive, providers of mobile wallet apps should think of products that are more and more functional, reliably secure, and user-friendly.