Digital Wallets and Unified Commerce – A New Era in Payment Behaviour

In times of rapid digitalisation and rising customer expectations, the way we shop and pay is changing. Online and offline worlds are increasingly merging into a holistic purchasing experience, also referred to as “unified commerce”. Digital wallets are key drivers of this transformation. 

Nowadays, anyone purchasing a product or service does so via many different channels – online, on mobile, or in person. Customers order from the comfort of their sofa at home and collect their goods in-store. They seek advice face to face, but complete the booking later online. Or they pay on-site but want the goods delivered to their home. Merchants are therefore compelled to connect their online and offline sales channels. Unified commerce is the order of the day. 

Digital wallets are becoming more popular

Changing purchasing habits are accompanied by new payment methods. Younger generations in particular show a preference for paying with digital wallets, also known as e-wallets. These are services that enable electronic transactions without the need for physical cash or a physical card. 

From a technical perspective, wallets are primarily a place to store card information securely. Users can link their debit or credit card and use their smartphone to complete payments conveniently and seamlessly, both online and offline at the point of sale (POS). Despite the advanced digital technology, the conventional debit or credit card generally remains the basis for these payment transactions. 

Among the best-known digital wallets are Apple Pay, Google Wallet (Google Pay), Amazon Pay and PayPal. The scale of their potential is illustrated by a study published in May 2023 by the EHI Retail Institute in Cologne. According to the study, in 2022 PayPal overtook invoice payment as Germans’ most popular payment method in e-commerce. Almost 30 per cent of all online purchases are settled via the US online payment service PayPal. 

Wallets are not a passing trend – they are here to stay

Trust in digital wallets is high, and for several reasons. Wallets are easy to use and often provide additional buyer protection. They store customer data and thereby speed up the checkout process in e-commerce. Those who wish can view their transactions centrally and do not have to search laboriously through emails if they want to return an item. Wallets are also versatile and often bundle several payment methods, from direct debit and instalment payments to the option of storing multiple credit cards. 

However, there are also concerns, particularly with regard to data protection and costs. From the merchant’s perspective, digital wallets are often said to be more expensive, primarily because of blended pricing models, as wallets combine various payment methods under a single fee. In addition, some customers – particularly older ones – prefer more traditional ways of paying. Digital wallets therefore do not replace invoice payment, but rather complement it. 

Nevertheless, digital wallets are rapidly changing traditional payment behaviour. Companies that want to succeed in today’s highly competitive retail landscape should take this trend into account and accept payments via digital wallets, whether in-store or online. 

What to consider when integrating digital wallets

The simplest way to accept digital wallet payments is to choose a payment partner that supports the integration of digital wallets. For small and medium-sized businesses in particular, it often makes more sense to rely on a payment service provider rather than trying to navigate the payment jungle alone. One advantage of this approach is that merchants do not have to register for and integrate each individual service separately. 

It is advisable to choose payment providers such as Unzer that also offer white-label products. In this way, the customer relationship remains clearly with the merchant. This is especially important for products where price is a decisive factor, as customers can abandon the purchase more easily due to the anonymity of the wallet. 

What is Unzer’s view on wallets?

With Unzer, integrating all payment methods, including wallets, is extremely straightforward. Unzer’s expertise covers the entire spectrum of payment and commerce solutions, from POS and e-commerce systems to white-label “Buy Now, Pay Later” offerings. At the same time, Unzer provides tailored products that match the merchant’s brand image. 

About the Author:

Timo Seifert is Director Product Management in the Payments division at Unzer. In this role, he ensures that merchants can offer their customers all common national and international payment methods, both online and offline regardless of currency and without major effort. He is also responsible for the overall product development and integration of new payment methods.