Sähköinen lompakko

Digital Wallets: 5 Questions on e-Wallet Services for Business


Digital wallets are hardly a novel innovation. Though, it is only recently that they have seen more widespread adoption in the Finnish market. Especially mobile wallets have seen a surge in usage as of late.

Apple Pay made its Finnish debut at the end of October and MobilePay is being pushed into the point-of-sale with gusto.

In addition, the store specific payment apps are growing more common by the day. As an example, Hesburger and Espresso House have both invested in mobile wallet development by combining a payment functionality into their loyalty app.

It is high time to start familiarizing yourself with the opportunities that growing mobile payment adoption brings to the table. This article will go through the essential questions you need to answer, before any investments into digital wallets.

1. WHAT are Digital Wallets?

At the basic level, digital wallets are device specific or cloud based applications that enable digital transactions. This transaction could be for example an online purchase, a contactless payment with your phone, or a MobilePay transfer to your friend.

In addition to funds, electronic wallets are able to store various other information, such as payment details, passwords, and even tokenized credit cards.

Electronic wallets can be roughly divided into two categories:

1. Cloud based wallets, which are created for purchases made form specific companies. Brand specific mobile applications, such as Espresso House’s “Coffee Card” and payment systems of larger online retailers also fall into this category.

2. Digital wallets tied to the consumer device, which are used for general payments and transactions, either online, offline, or in-app. This group includes most e-wallets utilizing tokenization and NFC, like Apple Pay and PiVo, as well as online wallets like Paypal and Masterpass.

Even within these categories, there can be notable differences in tech and functionalities, but the main objectives of the wallets are very similar: Make paying faster, ease customer authentication and improve data security.

Many wallets also take advantage of functionalities from both categories.

In consumer’s mind, an e-wallet is usually seen as the latter, alternative payment method. Both implementations do bring new value to both customers and merchants.

2. WHY are e-Wallets an Important Part of my Payment Services?

An electronic wallet can improve your customer experience in many ways. This will culminate in higher conversion rates for eCommerce and improved service in brick & mortar.

The ability to automatically store and fill customer information is an excellent way to speed up remote payments, both online and in-app.

In conventional stores, mobile wallet users gain an access to higher purchase limits compared to contactless cards as well as money transfers between users.

Electronic wallets also improve payment security. This is a very welcome addition to eCommerce, where online payment fraud and false positives are a source of tremendous losses for online entrepreneurs.

Smartphone working as a “key” brings additional safety to online transactions. Also, tokenized credit cards make it easier to authenticate legitimate customers.

The security layer created by mobile wallets benefits all parties.

Currently, instead of the retailer, customers may choose to hand their personal information to a 3rd party wallet, which handles their encrypted transmission. This allows the seller to only store information necessary to marketing efforts, which will be a great relief after the GDRP regulation comes to power.

As the security and speed of payments improve, the conversion rates of ecommerce rise in conjunction.

This, in addition to improved service in brick & mortar stores, is a good motive for retailers to adopt new wallet technologies, highlighting how customer view of payment security can reinforce purchase decision.

3. HOW do electronic wallets change payments?

Electronic wallets enable many new functionalities to augment your payment services.

Server-side wallets let you take advantage of new customer data. Improving the buying experience, marketing targeting, and accelerating the payment become possible, thanks to wallet technology.

Different loyalty programs are also a good way to take advantage of the new technology.

Another benefit brought by digitalization is the gradual shift from physical receipts to electronic ones. Warranties are notably easier to handle when receipts are safely stored in digital wallets.

This kind of trend also makes it easier for consumers to track their expenses. It will be interesting to see how widely PSD2’s account information services will be adopted to banks’ own mobile wallets.

Electronic wallets also enable many value added services. Examples of such functionalities include: Electronic loyalty cards, various promotions, larger contactless payments, event schedules, service personalization, and localization of purchase.

Some digital wallets are defined by the communities that have grown around them.

Nordic mobile wallets have roots in consumer money transfers, which has caused small “fan clubs” to form behind specific applications. This is a natural development, as all users benefit from wider adoption.

The situation is likely to change, when mobile transfers will work between different wallets. Automatia’s Siirto network is a good step towards this direction. It is a shame though that connecting all services to this network has been unsuccessful as of yet.

4. HOW do I Make Online Wallets a Part of My Business?

Adding a server-side digital wallet as part of an organization’s services is not the simplest task. This is due to the abundance of options, service providers and technologies competing for your attention.

You need to decide, which payment methods to accept, should the wallet be built from ground up, or is a premade option enough to fit your requirements.

Add this to the wide range of service providers and you end up hard pressed to make an educated choice. It doesn’t help that every new feature involves additional work and expenses.

Digital wallets are very malleable. Only your imagination (and budget) is the limit when building a new wallet. The chosen features can range from contactless payments to marketing analytics, and from inventory management to risk management.

At the very basic level, retailer’s electronic wallet is “just” a web-application that accepts card payments.

At the other end of the spectrum, there are the mobile wallets of large banks’ that are built from ground up, or ones customized from existing white-label solutions to fit very specific requirements.

When choosing your approach, make sure to take into consideration the maturity of different services. It’s not said that every wallet provider is able to offer equal features or level of service.

At best, e-wallet can solve many problems for your customer. For example, you could take advantage of electronic receipts to improve your return process, or make your payment service support recurring orders.

To ensure the best choice of investment, it is critical to understand your customers. E.g. if your webstore’s revenues come from mostly overseas, support for a very local wallet is unlikely the be a very relevant feature for you.

When planning your wallet investment, you should ask yourself: “How does the new system help my customer?”

Highly local payment systems do have their place though. For example, public transit often uses closed-loop payment systems, where the loaded funds are only usable for specific trips. Solutions like this are cost effective to produce, but often fail in retail, due to the difficulty of attracting new users. Many of the successful implementations have been built on an existing application and userbase.

Wallet investments often carry some risk. For instance, problems could arise if consumers end up favoring features or payment methods your service is missing.

You should be aware that a ton of purchases are abandoned due to lacking payment methods. This makes it dangerous to opt for the cheapest option for digital payment services.

Online Wallet: 4 approaches to implementation

Having your wallet service built from scratch is likely to be the best option for bigger players. That is not to say that there are no sensible solutions for SMEs as well.

  1. Premade wallet is the most common way to approach online payments. Most payment service providers offer a solution for this, but the functionalities vary wildly, especially when it comes to utilizing customer data.
  2. White-label wallets are the most cost-effective way to build a service unique to your brand. Solutions like this are often partly standardized, allowing for personalization in appearance, functionality, and features, while leaving back-end intact.
  3. mCommerce platforms are often a great choice for a new online merchant. In addition to payments, they include most functionalities required to set up a mobile webstore. Though, the services do come in all shapes and sizes, with some even lacking a proper online wallet.
  4. Building your own wallet should be considered, when you need features unique to your business, or you need better control of your customer data. Often the optimal solution to larger organizations, with budgets suitable to cover the cost of development.

When working towards their own digital wallets, entrepreneurs will have to face many technical challenges.

The choices are further complicated by the fact that most wallet services have very different goals. Some are just a place to store credit cards and make contactless payments, with others concentrating on online checkout, and some only offering transfer of funds between users.

The best solution is always a service that combines these features into an optimal package for your business. You should also consider how the new wallet will function in the channels your business is present in.

In brick and mortar for example, you need to prepare for the challenge of combining mobile payments to your existing payment system.

When deciding on the wallet service, think about how the mobile wallets will communicate with your POS -system. For more familiar Bluetooth / NFC setups, it’s enough that your customers have an easy access to a payment terminal. With QR codes on the other hand, you must ensure suitable conditions to film the code.

You don’t need to be excessively vary of the higher end options either. If for example your organization already has an existing customer application, it is easy to augment the service with wallet functionalities from a third party. This will cut the cost of development considerably.

5. WHAT Will the Future of Digi-Wallets Hold?

Digital wallets will gradually become more commonplace with both consumers and companies. Though, the market is likely to change in many ways during the next few years.

Mobile wallets are here to stay when it comes to eCommerce. In the future, more and more service providers will include the most common wallets as part of their solution. It remains to be seen, which wallet services gain enough traction to establish their place in the Nordic payment ecosystem.

We also expect the new mobile wallets to take ground from the old fashioned online banking buttons. After all, if the customer already needs to authenticate themselves with the bank’s mobile application, why not forgo the effort and just pay straight from the app?

It will be fascinating to follow; how mobile wallets bring traditional & online retail closer to each other. Perhaps one day, online payments will be as quick and effortless as contactless payments are now.

Electronic wallets have yet to reach their final form, as many development avenues remain unexplored.

Due to their ability to securely store data, digi-wallets could be used in customer identification for example. Concepts such as; Age verification when purchasing restricted products, electronic KELA / health insurance card in pharmacies, or storage of various loyalty cards within your wallet, would be good uses for the novel technology.

In electronic wallet implementations, the final decisions should be made on the terms of customer experience. After all, the customer is in the center of any business, making the competition for their favor an excellent reason to improve your payment experience.

As such, understanding your customer becomes vital, even when planning your payment services. The most successful implementations will solve customers’ problems and improve their quality of life.

About the Authors:

Mikko Laaksonen

Mikko LaaksonenCTO of Seitatech, with decades of experience in ITM & payment development. Mikko's technical vision seamlessly combines technology and business goals.


Toomas Selkänen

Toomas is a digital marketing specialist, with a soft spot for payment technology. He writes on payments industry topics from a layman's perspective.

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