Accepting digital wallet payments is becoming standard practice for any business that processes in-person customer transactions. Consumers are increasingly making purchases with their phones instead of their physical wallets, and retail businesses are equipping themselves to do business in an era where the "tap" is quickly replacing the "swipe". The share of consumers intending to use three or more digital wallets increased from 18% in 2021 to 30% in 2022.

Read on to learn everything you need to know about accepting digital wallet payments for your business.

What's in this article?

• What are digital wallets?
  
• How to accept digital wallet payments
  
• What hardware do I need to accept digital wallet payments?
  
• Benefits of digital wallet payments for businesses
  
• Costs associated with digital wallet payments
  
• Digital wallet apps
  

What are digital wallets?

Digital wallet technology turns smartphones into payment devices that can initiate financial transactions. Similar to a physical wallet, a digital wallet holds various payment methods – credit cards, debit cards and bank account numbers – to be used at the point of sale.

Functionality varies depending on the underlying technology. Most digital wallets allow mobile devices to make payments at any point of sale that is enabled for contactless transactions, but some also allow customers to use rewards, spend loyalty points or store concert and cinema tickets, personal identification, boarding passes and more.

We'll focus on the payment aspect of digital wallets and what businesses need to know to begin accepting this increasingly common payment method.

Why businesses should accept digital wallets

Expanding the number of payment methods you accept can benefit your business, while offering limited payment options can reduce conversion rates because they create a barrier for would-be customers. Digital wallets, in particular, offer businesses unique advantages. Whether your business primarily sells in-person, online, or both, digital wallets give customers flexibility and speed up the checkout process. In a physical store, customers can tap a smartphone or smartwatch to pay in seconds. Online, customers can check out in a single click, giving them fewer reasons to abandon their cart before completing the purchase.

Customers increasingly prefer digital wallets over other payment methods: 15% of digital wallet users report regularly leaving their physical wallets at home, and an additional 11% consider doing so when they know they’ll be able to use a digital wallet. Adopting digital wallets can also help you reach a broader customer base. Asia dominates when it comes to digital wallet spend, but adoption is growing in many regions. More than 4.3 billion people use digital wallets globally, including 57% of US adults as of 2024. Digital wallets make your business more accessible for people who prefer this payment method.

Digital wallets employ encrypted transactions and biometric authentication, which makes them highly secure. Because digital wallets interface with most modern payment systems, businesses have minimal—if any—work to do in order to accept this payment type. All Stripe hardware, for example, can accept digital wallet payments.

How to accept digital wallet payments

Most payment processing providers support digital wallet payments. If you already have a provider, contact them for assistance with setting up these payments within their ecosystem of hardware and software. If your payment processing provider doesn't currently support digital wallet payments, it might be time to find a new provider.

If you're just getting started with accepting customer payments, you might still need to select a merchant services provider and open a merchant account. These providers can help you accept and process payments from customers via payment methods such as credit and debit cards, checks and ACH transfers and digital wallets. They also usually provide the point of sale (POS) software and hardware needed to accept payments at brick-and-mortar retail locations and online. Depending on which you choose, your merchant services provider may also offer ecommerce, marketing or analytics support.

What hardware do I need to accept digital wallet payments?

Digital wallet payments are processed in person using near-field communication (NFC), a technology that enables two devices in close proximity to wirelessly communicate with each other. Mobile card readers and modern payment terminals often accept contactless payments using digital wallets.

Costs associated with digital wallet payments

Payment processing providers often charge fees to process these contactless payments. However, Stripe charges no additional fees to process Apple Pay payments, and the pricing is the same as for other card transactions.

Most digital wallet providers make money by charging a small percentage on each transaction to the banks and other financial institutions that host the payment methods stored in the wallet. In most cases, this extra cost isn't charged to customers or the businesses they patronise.

Digital wallet apps

The digital wallet market will continue to expand, with new competitors entering the space in the next few years. Currently dominant digital wallet providers include widely used apps such as Apple Pay, Google Pay and various apps from the major credit card networks, but this is an actively expanding industry.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business accept digital wallet payments online, in person, and around the world.

Stripe Payments can help you:

• Optimize your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 100+ payment methods, including more than a dozen digital wallet payment methods, and Link, a wallet built by Stripe.
  
• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.
  
• Unify payments in person and online: Easily track and reconcile digital wallet payments across online and in-person channels.
  
• Improve payments performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.
  
• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% uptime and industry-leading reliability.
  

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.