Today we are bombarded by video ads, billboard ads and radio ads from bank, retailers or start-ups promoting their new digital wallet and payment apps and platforms.
Successful companies like Apple Pay, Samsung Pay, PayTM from India or the pioneer PayPal are now dominating the market but it appears there is a market at its infancy as more and more companies are launching products and apps, including telecom or utility companies.
Why is this so big?
First of all, having a digital wallet app provides loyalty and builds a captive customer market, one of the goals for the new wannabe market dominators.
Second, digital wallets are also big business not just a marketing tactic for retention. The basic business model for these companies is placing the user deposits from the digital wallets into escrow accounts and receive interest from the banks. More users, means bigger account and higher interest return.
More users also mean that this platforms could generate earnings from the dual market aka advertising or fees from their marketplace. This is why companies such as PayTM has a huge marketplace, selling everything from tickets, to gadgets and insurance.
Commission from the supplier companies is also an income line but this alone could not sustain a business, so in order to thrive, a digital wallet company must have divers income lines.
Retail is particular interested
In the Retail sector, “Digital wallets enable retailers to reduce the payment costs for the customer and their costs in a variety of ways. A closed wallet model eliminates banking transaction costs, and thus transaction fees can be substantially reduced for the customer.
Digital wallets also offer the retailer scope to offer additional services for their customers that extend well beyond payments and into loyalty schemes and gift cards. They also enable the retailer to communicate with customers in a more informed and targeted way as a result of the data collected on the customer’s behaviour and preferences,” according to finextra.com.
Enjoy them while they last
The market, as we mentioned before, is still in the early stage and this is the reason why some of the deals and cash back offers are so good for the users. Enjoy them while they last because, as it is often the case, once these companies achieve dominant position on the market, their new objective will be to start making money for the shareholders. When this happens, these deals will stop.
