• gregpro12

The Impact of eWallets on eCommerce

Updated: Apr 28

An increasing number of merchants are adopting eWallets to increase their mobile conversion rates

Given an average cart abandonment rate of 69% (Baymard Institute), a large part of a merchant’s job is to improve the online shopping experience in order to discourage cart abandonment.

Merchants have a variety of tools and techniques to reduce friction during the checkout process, including guest checkouts, reducing the number of steps needed to make a payment, optimising the payment page and/or introducing new means of payment, among many others.

An innovative approach to reducing the cart abandonment rate and subsequently increasing sales consists of implementing eWallets as a payment option for customers. In this article, you will learn more about this approach, its deployment, and most importantly, its impact on eCommerce.

What is an eWallet?

In a nutshell, the eWallet, also known as a digital wallet, is a software-based service that stores a user’s payment information on a “wallet”, which can then be used to make purchases online and offline. eWallets are now used all over the world, and you certainly heard of the best known ones, such as Apple Pay, Google Pay, Samsung Pay, PayPal and Amazon Pay.

iPhone with Apple Pay screenshot
eWallets (here Apple Pay) can store multiple bank cards

Beyond their differences in terms of geographical coverage, eWallets can be distinguished from one another according to two main criteria:

  • Availability (or lack) of user data. For example, Paylib and Lydia are eWallets that facilitate online payment, but do not provide user data such as first name, last name, and address

  • Whether it can be used in-store and/or online

eWallets are gaining in popularity, with 140 million new users adopting them every year; the French (who are still trailing behind the rest of the world) are increasingly adopting them as well. A recent Statista study found the top 6 most popular eWallets in France used for in-store purchases in France:

Screenshot of a Statista report
Apple Pay and Google Pay are leading the race

With eWallets, the “Amazon style” 1-Click checkout is possible for first-time customers

Amazon’s innovative 1-click checkout feature has been phenomenal success. For many years, the company fought tooth and nail to retain exclusive rights over the usage of the 1-Click checkout, but fortunately for eCommerce retailers, its patent expired in 2017.

Buy now with 1-Click Amazon button
Amazon's 1-Click Checkout was a tremendous success due to its ease of use

Thanks to the exhaustive information contained in eWallets, any eCommerce website can offer to its new and existing customers a one-click payment from the shopping cart or even the product page.

What does this look like in practice? Below is an example of a 1-click shopping journey for a new customer using Google Pay:

Google Pay purchase Gif on an Android

Fast! When a user clicks on “Pay” with his or her eWallet:

  • The payment is processed by the eCommerce site's payment service provider

  • The user’s information is shared with the merchant in order to finalise the order (only if necessary, following a purchase). This information can then also be added to the customer account, respecting certain rules and regulations, for example GDPR.

This lightning fast online shopping experience is fully customisable with:

  • The placement of the eWallet buttons on the website: on the product page, and/or on the shopping cart, and/or on the login page…

  • Adding (or not) a delivery address and/or option

  • Requesting (or not) a phone number

A great opportunity that requires the deployment and management of multiple eWallets

The bewildering simplicity of making a purchase with an eWallet could make one think that this solution ought to be part of any merchant’s basic toolkit.

The eWallet’s capability is all the more important on smartphones as users are generally more reluctant to enter information manually, which may have dramatic effects on sales. Some merchants have reported up to 20% increase in mobile eCommerce sales when Apple Pay was offered.

Despite the potential sales growth, few merchants offer eWallets on their platforms. According to Stripe, only 12% of payment forms in Europe offer Apple Pay and Google Pay as a payment method.

Several factors explain why merchants have delayed their eWallet adoption.

First, while eWallets are generally simple to deploy on payment pages, they can quickly become complex to manage, especially with regards to the:

  • Management and creation of a customer account, as well as the addition of an order to an existing account

  • Real time management of the flow of information and processes concerning delivery options and features through payments made with eWallets

  • Integration of payment service providers with the chosen eWallets

  • eWallet validation, activation, and compliance processes

Next, the eWallets’ APIs are constantly being updated, requiring permanent monitoring and regular technical updates of the integrations to ensure a proper functioning.

  • Following its re-platforming, PayPal has updated its PayPal Checkout API almost weekly during 2020. Many merchants who had not updated their integrations weekly have reported very low payment acceptance rates.

Finally, merchants would have to activate several wallets on their websites to ensure that sufficient eWallet users are able to pay with their respective providers, whose market shares are rather fragmented, with:

  • Apple Pay, which covers iPhone and Safari users, but generally accounts for only about 20% of sessions

  • Google Pay, which covers Android and Chrome users, but with varying engagement rates depending on the types of user

  • PayPal and Amazon Pay, which each cover about 50% of internet users in France, but whose significant costs generally lead the merchant to deploy one or more alternatives simultaneously to reduce costs.

As a result, the complexity of multiple eWallet integrations (with 3 or more being the general recommendation) pushes many e-merchants to delay eWallet adoption.

It is clear that merchants require excellent technical support in the deployment and maintenance of eWallets. With continuous growth as a result of ever-increasing consumer demand for a quick and simple payment solution, eWallets present the perfect opportunity for merchants to decrease their cart abandonment rate, increase their revenue, and, most importantly, improve customer service satisfaction, and return rate.