digital wallet vs mobile wallet

Digital Wallet Vs Mobile Wallet for Your Loyalty Program



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digital wallet vs mobile wallet

Loyalty programs are valuable for small businesses, including coffee shops, hotels, gyms, and nail salons. They allow you to reward loyal customers, increasing customer satisfaction and boosting revenue.

The market for loyalty program management solutions is rapidly growing, expected to reach $24.44 billion by the end of 2029, according to Statista.

Now is the right time to implement mobile wallets into your loyalty program strategy to provide a convenient and seamless user experience, allowing customers to easily access and use their loyalty cards on their mobile devices without needing physical cards or coupons.

If you’re thinking about enhancing your loyalty program and improving customer experience, you can start using customer loyalty software such as PassKit. 

Our platform integrates with popular mobile wallets your customers already use and trust. It allows consumers to earn points and redeem rewards using their mobile devices online or offline. It encourages contactless shopping and provides a connected customer experience your buyers will enjoy. 

Want to see PassKit in action? Sign up for our 45-day trial to explore our exceptional features.

If you’re wondering whether to choose a digital or mobile wallet for your loyalty program, in this article, we will address the differences and explain why they are both critical. 

Additionally, we will explain how PassKit helps you leverage these systems to optimize your loyalty program.

Importance of loyalty programs in small businesses

customer loyalty program benefits

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If you run a small business, you have much to gain by creating and running a loyalty program. 

What are some of the critical benefits? 

  • Improved customer retention and repeat business – small companies often have limited resources and marketing budgets, making word of mouth and brand loyalty essential to their success. Loyalty programs help you improve user retention and increase customer lifetime value by giving people additional reasons to revisit your business.
  • Better relationships with customers – a loyalty program, even a simple one, allows you to show your consumers you value them. It’s an excellent strategy for building long-lasting relationships with your customer base.
  • Cross-selling and upselling – depending on the structure of your loyalty program, you can also create opportunities for cross-selling and upselling. A good example is offering discounts for one type of service when customers buy another product or service several times.
  • Increased revenue and profits – most of the above benefits will result in higher revenue for your company.

Using digital and mobile wallets is an excellent way to boost your loyalty program. But what are e-wallets, and how can they improve your loyalty programs? 

Let’s explain in the following sections.

How digital and mobile wallets improve loyalty programs

digital wallet vs mobile wallet

Image source: Business Times

Digital and mobile wallets provide customers with a convenient way to store and use loyalty reward cards, digital membership cards or e-gift cards

They encourage contactless payments providing significant advantages in specific circumstances, such as covid pandemic. 

Your customers no longer have to carry paper or plastic cards in their physical wallets. They just need their mobile device at hand.

Additionally, large corporations typically manage these systems with robust security measures in place, ensuring the safety of your client’s information. 

However, if you plan to incorporate digital or mobile wallets into your loyalty program, it’s crucial to understand how they work and differ from traditional wallets.

Understanding digital wallets

digital wallets

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Here are some fundamental aspects to consider regarding digital wallets.

What is a digital wallet and how does it work?

A digital wallet is a payment system that allows customers to make purchases without sharing their credit card or debit card details with a merchant. 

To use a digital wallet, customers must first connect their card to the service, after which they can use the wallet’s payment option or mobile application to purchase goods or services. 

Some digital wallets work for online purchases, while customers can use others in physical stores as a contactless payment method. 

Overall, digital wallets offer a convenient and secure way to purchase without carrying physical cards or providing merchants with sensitive financial information.

Four types of digital wallets

There are four main types of digital wallets: closed, semi-closed, open, and crypto-wallets.

Closed wallets are a type of e-wallet you can use only to conduct transactions within the service’s operator ecosystem. It means you can use them to make payments to the company or its users but cannot use them for transactions with other merchants or services.

Semi-closed wallets work similarly to closed wallets, but you can use them in more circumstances. However, they only work with specific registered partners and retailers online and offline.

Open wallets are a type of e-wallet you can use anywhere. They are usually issued by a banking or financial institution or in close cooperation with them. This type of wallet allows you to use your credit or debit cards within the service, making it a versatile option for many users. Most of the existing mobile wallets fall into this category.

Crypto wallets are a specific type of e-wallet you can only use to hold, send, receive, and spend cryptocurrencies such as Bitcoin, Ethereum, and Dogecoin. Crypto wallets usually do not offer the option to process other digital wallet payments and transactions.

Let’s discuss mobile wallets to help you understand subtle differences.

Understanding mobile wallets

mobile wallets

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You must know critical details to understand how mobile wallets differ from digital wallets. Let’s share some information.

What is a mobile wallet and how does it work?

A mobile wallet is a type of digital wallet customers can access through a mobile app on a device that supports NFC payment.

Its primary feature enables users to make in-store payments similar to using a standard contactless credit or debit card. 

To make a payment, users hold their mobile device near the payment terminal, which is processed using NFC technology. 

It makes mobile wallets convenient and secure for users who prefer transactions using their mobile devices rather than physical cards.

What are some popular mobile wallets?

WeChat is a Chinese app that serves as a social media platform, e-commerce platform, mobile payment system, and communication channel. In China, it’s a must-have app for many people.

Google Pay is a mobile wallet provided by Google, one of the biggest internet service providers globally. 

It acts as a virtual wallet that lets users store loyalty program cards, digital tickets, and payment cards, enabling people to spend through their mobile devices.

Apple Wallet is a mobile wallet that provides similar components to Google Pay. The main distinction is that Apple Wallet is exclusively available on Apple devices, while Google Pay is available for Android and iOS devices. 

Additionally, Apple Wallet supports Apple Pay, a contactless payment system that allows users to make payments in stores, within apps, and on websites using their Apple devices. 

Google Pay does not have a proprietary contactless payment system like Apple Pay.

Samsung Pay is a mobile wallet developed by Samsung that allows users to make payments, transfer money and store various cards on their mobile devices. 

Samsung Pay offers features similar to other mobile wallets, such as Google and Apple Wallet. Despite its name, it can work on Android phones, not just Samsung devices.

You can read our Samsung Pay vs Google Pay comparison to learn more.

Digital wallet vs mobile wallet: The fundamental differences

digital wallet vs mobile wallet

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Mobile wallets are primarily designed for contactless payments, setting them apart from other digital wallets that only allow online transactions. 

PayPal, for instance, has a dedicated mobile app but does not provide contactless payment options, making it a digital wallet but not a mobile one.

In addition to enabling contactless payments, some mobile wallets, like Google Wallet and associated services, can facilitate online transactions.

This overlap can create confusion regarding the differences between wallet types, so let’s discuss these distinctions in more detail.

Digital wallet vs mobile wallet: User interface and design

Mobile wallets have a user-friendly interface designed to suit mobile devices and applications. 

After setting up the mobile wallet by selecting login options and adding payment items like credit and debit cards and loyalty cards to the main screen, you can easily switch between them and choose the one you need by swiping the touchscreen. 

To make a payment, you must hold your smartphone near a payment terminal or present your pass to the staff.

Digital wallets, on the other hand, tend to be more complex systems. 

They may require you to verify your account through a banking transaction and link various payment options and cards. 

Once you have completed the setup process, they are generally easy to use. However, ease of use may vary depending on the digital wallet’s implementation.

Digital wallet vs mobile wallet: Device compatibility

Mobile wallets are primarily designed for mobile devices. However, you can link some solutions with payment systems used for online transactions on other devices. 

In comparison, non-mobile digital wallets are often accessible on any device, including smartphones and PCs. However, they are generally not suitable for use in traditional transactions outside of the Internet.

Digital wallet vs mobile wallet: Geographic availability

The availability and accessibility of digital and mobile wallets may be limited by geographic location and can vary depending on the chosen payment system and country. Therefore, verifying the wallet’s availability beforehand ensures you can use it in the intended area.

Digital wallet vs mobile wallet: Security

Digital and mobile wallets are generally secure, although the level of protection can differ based on the specific technology used. 

However, mobile wallets are often considered safer for the average user due to the convenience and reliability of biometric authentication systems, such as fingerprint scanners. It eliminates the need to remember passwords, which can be easily forgotten or saved in an insecure browser.

Additionally, many mobile wallets have an added layer of security for bigger transactions, which allows users to make everyday purchases without any further authentication requirements, similar to using a traditional payment card. 

It is important to note that security features may differ between different mobile wallet providers, and we recommend carefully reviewing the security measures before choosing a provider.

Digital wallet vs mobile wallet: Payment options

Both digital and mobile wallets typically require you to link your credit or debit card to the system to use them. 

Popular wallets support major card operators such as MasterCard, VISA, American Express, or Discover, although the specifics may differ depending on your location.

However, significant differences exist in using digital and mobile wallets. Digital wallets are primarily used for online shopping, while mobile wallets are intended for in-person transactions at physical stores.

Digital wallet vs mobile wallet: Loyalty program integration

Both digital and mobile wallets can integrate loyalty programs, but there are some differences in how they work.

Popular digital wallets typically allow for the integration of loyalty programs through virtual loyalty cards or storing loyalty program information within the wallet. It enables digital wallet users to earn and redeem rewards seamlessly during online transactions.

On the other hand, mobile wallets may offer more robust loyalty program integration by leveraging technologies such as near-field communication (NFC) and geolocation. 

NFC allows users to tap their mobile device at the point of sale to earn rewards automatically, while geolocation can enable targeted offers and promotions based on the user’s location.

Overall, both digital and mobile wallets can provide convenient access to loyalty programs, but mobile wallets may offer more advanced features for program integration.

Digital wallet vs mobile wallet: Ease of use

Once set up, digital and mobile wallets are easy to use. Most digital wallets involve:

  1. Selecting the payment option
  2. Logging in
  3. Choosing one of the connected cards
  4. Confirming the transaction

On the other hand, mobile wallets are even more straightforward – it usually just involves selecting the card you want to use for payment and holding your smartphone near the terminal.

Digital wallet vs mobile wallet: Customization options

The customization options in digital and mobile wallets depend on the specific system or application. However, as a general rule, neither type of wallet provides an extensive selection of customization options.

Digital wallet vs mobile wallet: Types of supported transactions

When comparing digital wallets to mobile wallets, it’s essential to note that most digital wallets usually only support online transactions. 

In contrast, mobile wallets typically allow users to conduct contactless payments in physical stores and online transactions. 

Mobile wallets use NFC (near-field communication) technology to communicate with the store’s payment terminal, allowing users to purchase at retail locations.

Digital wallet vs mobile wallet: Transaction fees

Regarding transaction fees, the policies may vary between digital and mobile wallets depending on the specific service provider. 

While some digital wallets may impose a small percentage of the transaction amount as fees, others may have no costs at all.

Mobile wallets are generally more likely to have no fees associated with their services. Some providers may offer cashback rewards or promotional offers to encourage their usage. 

It’s important to note that the fees and rewards offered by different mobile wallet providers may vary and depend on the specific transaction.

Digital wallet vs mobile wallet: User adoption rate

Digital wallets have been on the market longer, which results in higher adoption rates. Around 60% of US consumers use them in one form or another. 

Mobile wallets are still a relatively novel concept and haven’t won people over so far. According to PYMNTS Mobile Wallet Adoption Report, only 5,8% of US consumers used them in Q2 2022. However, it’s also worth pointing out that some experts expect global mobile wallet adoption to reach 60% by 2026.

In conclusion, digital and mobile wallets have unique advantages and limitations. 

Digital wallets are convenient for online transactions and offer a more comprehensive range of payment options but may have limited use for physical transactions. 

Mobile wallets offer greater convenience for physical transactions with contactless payments and often have better security features. 

Ultimately, the choice between the two will depend on personal preference, the specific features offered by the service provider, and the intended use cases.

Since you learned all the key differences, let’s discuss the challenges you might encounter while working with these e-wallets.

Challenges of implementing digital and mobile wallets

digital and mobile wallets

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You can face some issues when implementing mobile and digital wallets in your business.

Technical challenges

Integrating different wallets may involve diverse technologies and protocols, leading to potential technical difficulties. 

To tackle such obstacles, having the required expertise within the organization or seeking assistance from external specialists is crucial.

Security challenges

Security is a significant concern that deters customers from using digital and mobile wallets. These services depend on device security, which businesses often overlook.

You can address this issue by highlighting security measures, including user verification, data encryption, and bank account approvals for significant transactions. 

This emphasis can increase customers’ confidence and encourage adoption.

User adoption challenges

One of the significant challenges with mobile wallets is low user adoption, especially among older age groups. 

You can address this issue by building your customer experience around the preferences and behavior of young customers, who are more likely to adopt mobile wallets.

You can also offer discounts, cashback, or other incentives to encourage usage.

Cost considerations

Implementing digital and mobile wallets can be resource-intensive despite the benefits of offering customers more payment options. 

You must weigh the costs and benefits of executing these services.

To maximize the benefits, you can integrate these wallets with your loyalty programs, enhancing the customer experience and boosting customer loyalty.

To streamline this process, you can use third-party solutions like PassKit, which offers an easy-to-use digital loyalty platform integrated with mobile wallets. There is no need for custom app building or hiring design and development teams.

With PassKit, you can minimize the time and resources needed for implementation while maximizing the benefits of digital and mobile wallets.

Let’s explain how.

What is PassKit and how it works

PassKit customer loyalty platform

PassKit enables you to effortlessly create and manage loyalty customer cards, membership cards, coupons and passes that customers can store in mobile wallets like Apple and Google Wallet. 

Customers can easily access and redeem loyalty cards and coupons without carrying physical cards or memorizing coupon codes.

It delivers several benefits, such as enhanced customer convenience, brand visibility, and engagement. Consequently, this increases usage and redemption rates for loyalty programs, ultimately leading to customer retention and business revenue.

PassKit also allows tracking customer engagement and gathering insightful data on customer behavior and preferences. 

You can leverage this data to improve marketing campaigns and customize rewards and incentives for individual customers.

Start a 45-day free trial to see how our platform works.

Why create your loyalty program with PassKit

design loyalty progam

Here are some critical reasons to start using PassKit for your loyalty program.

  1. Improved security: Mobile wallets use advanced security features like biometric authentication and encryption to protect customers’ personal and financial information. It can help you build trust with your customers and reduce the risk of fraud or data breaches.
  2. Increased reach: Mobile wallets are widely used and easily accessible, allowing you to reach a larger audience and potentially attract new customers who may not have discovered your loyalty program or marketing campaign.
  3. Real-time updates: Mobile wallets allow you to update and modify loyalty cards and coupons in real-time, ensuring customers can always access the latest offers and promotions.
  4. Reduced costs: Using mobile wallets can help you save money on printing and distribution costs associated with physical loyalty cards and coupons.
  5. Eco-friendly: Using digital loyalty cards and coupons, you can reduce your environmental impact and demonstrate your commitment to sustainability.

Leveraging mobile wallets for loyalty programs and marketing campaigns can benefit your business. With PassKit, you’ll be ready to start in minutes, not months!

Start a 45-day free trial now.

Digital wallets vs mobile wallets: Final thoughts

Younger generations are more comfortable with technology and less likely to use cash for payments, which makes digital and mobile wallets increasingly popular. 

This trend allows you to leverage digital loyalty programs that appeal to younger customers. 

PassKit is the perfect solution to implement a loyalty program that integrates with mobile wallets. 

With PassKit as a loyalty program app, you can allow your customers to earn loyalty points and redeem rewards while using the wallet of their choice and paying with a service they trust. 

Our SaaS platform makes loyalty card design effortless, and you can even integrate our software with your CRM or POS to collect valuable customer data and improve your marketing efforts.

Take advantage of the opportunity to boost customer loyalty and increase sales through mobile-friendly loyalty programs. Sign up for a 45-day free trial today and explore all the great features!

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