Identifying and solving key aspects of global payments friction via the 2022 Global Payment Survey
Digital Wallets Create New Opportunities for Mass Payment Services
Digital wallets offer opportunities for mass payment services to lower the cost and improve the speed of payments – and create new revenue streams.
According to a recent study from PYMNTS.com, “Forty-nine percent of all mass payment recipients would choose to receive mass payments via digital wallet or direct deposit if they could. Digital wallet enthusiasts are also more willing than other consumers to pay an added fee to receive funds directly to their digital wallets.”
With that in mind, is there a real opportunity for service providers or software makers to meet that demand and open a new revenue stream? Or, perhaps extract a bit of margin by more effectively monetizing an existing payment distribution workflow?
Digital Wallets Remove Important Barriers
Software and service providers can become payment-enabled by embedding digital wallet and payments platform capabilities into their applications or services to provide a better mass payment process and a better user experience. Further, they can create an incremental revenue stream that aligns with their core business.
Multi-currency digital wallets create the capability for immediate, instant payment – across borders, currencies and payment form factors. Funds can be transmitted from a payer digital wallet to a payee digital wallet. Currency exchange is available to either party through the payments platform. So both parties can conduct business in their preferred currency simply by moving funds from one currency-specific wallet to another within their account. Transferring funds into and out of the payment platform can accommodate any number of options, including EFT or wire transfer, direct deposit, rapid bank transfer, virtual debit, or digital gift cards.
Digital wallets and a payments platform enable payment service providers and software firms to aggregate mass payments in new ways. These payment aggregation capabilities enable payment service providers to more easily manage mass payments on behalf of their clients from end-to-end. Software firms can automate payment distribution as a new or enhanced feature.
As mass payment aggregators, they can:
- track the complete payment history of all their connected digital wallets, either on behalf of clients as a service or by enabling clients to do it themselves
- easily integrate payment distribution data with other enterprise applications as needed
- set the basis for what fee, if any, to charge digital payment recipients based on the payment options they select when transferring funds from the platform.
Lowering Cost or Increasing Revenue?
Beyond the potential for new mass payment services and revenue streams, there are cost-saving benefits for service provider and software firm’s customers and their payees. Offloading AML compliance and tax reporting are two headaches that can be delegated to the payment platform. And enabling self-serve onboarding for payees can eliminate the need to manage personally identifiable information (PII) in-house, further lowering the overall cost of payment distribution.
Digital wallet transmissions improve the speed of payments by reducing payment distribution to its most elemental simplicity: moving funds digitally from Point A (Sender Wallet) to Point B (Receiver Wallet). No intermediaries. No delays. No added complexity. Senders and Receivers both maintain their existing banking relationships, moving funds to or from the digital wallet payment platform to those accounts as needed. Direct wallet-to-wallet payments bypass the card network reducing or eliminating yet another cost.
By far, the most significant cost-reduction opportunities lie with cross-border payments. Low-cost, on-platform, intra-account currency exchanges available to either sender or receiver replace high-cost FX exchange, wire transfer fees and intermediaries.
Different Potential for Different Use Cases
How any payment service provider or payment software firm determines how to embed digital wallet and payment platform capabilities is, of course, entirely dependent on their business model, how they elect to monetize payments, and the customer demands in their desired markets.
In any business, sustainable profits are generated either by lowering costs or increasing revenue. Depending on the use case, white-label digital wallet opportunities exist for one or both. How you choose to deploy them depends on your use case and your market.
See why over 25,000 worldwide forward thinking companies use XTRM’s multi-currency, digital wallets to provide their customers with turnkey payment service solutions.
Contact us today for a complimentary evaluation.