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How to Build a Mobile Wallet for eCommerce

Updated: Mar 19

Covid provided a record-breaking lift-off for eCommerce, and although growth may have eased off since then, the sector is still expected to grow rapidly during the years ahead.


After increasing by 16.8% in 2021, eMarketing statistics show that global eCommerce growth rates fell sharply to 7.1% in 2022. In 2023, however, the global ecommerce market is forecast to increase by almost 9% a year until 2026.


Digital wallets have played a central role in expanding global eCommerce sales to $5.9 trillion globally this year, with digital wallet usage expected to account for more than half of the value of international eCommerce transactions by 2025, according to a FIS Global Payments Report.


In its white paper, Digital Wallets Accelerating to a Cashless Society, Juniper Research predicts that the value of digital wallet transactions will exceed $12 trillion in 2026, a 60% increase on the $7.5 trillion recorded in 2022. By then, it says 60% of the global population will use a digital wallet.


The research company urges digital payment vendors to capitalize on this substantial growth by incorporating new solutions, such as buy now pay later where they don’t have them already.


Benefits of building a mobile wallet app for eCommerce

The steep growth in mobile wallets can be attributed to their many benefits for companies engaging in eCommerce. Some of the main advantages for companies setting up mobile wallet apps are the following:


Customer satisfaction builds loyalty

Customers enjoy the convenience of making electronic payments using a mobile wallet to pay for a purchase online rather than inputting credit card details repeatedly. Mobile wallets also make paying at a physical point of sale more effortless and secure than carrying around bank cards.


Digital wallets also enable companies to engage with their customers 24/7, giving eCommerce businesses the visibility they couldn’t achieve in traditional marketing mediums at a lower cost.


Together with positive customer experiences, mobile apps offer an invaluable opportunity to build brand loyalty. Creating loyal customers is the nirvana in eCommerce because they become repeat customers, and it’s less expensive to service existing customers than to acquire new customers.


To achieve and maintain brand loyalty, customers must have consistently positive, quality, and personalized experiences with the mobile app. According to Business of Apps, small screens usually make users irritated faster, with 32% of app users uninstalling an app if it’s not easy to use.


Mobile apps are also a gold mine for collecting and analyzing customers’ behavior and preferences. Businesses can use this information to tailor their marketing efforts and improve the products and services they offer in accordance with their customers’ preferences.


Increased sales

For various reasons, businesses with mobile apps see the positive impact of online and offline payments on sales and revenues. Mobile apps make it much easier for customers to pay for a business’s goods or services, leading to lower cart abandonment rates. Repeat customers also translate into higher average order values, increasing sales.


Steps to build a mobile wallet

Building a mobile wallet is an important journey you must make and, crucially, to get right. These are the steps you need to take to develop your mobile wallet if you want it to be a success:




1. Choose the type of digital wallet

The first decision businesses must make is what type of mobile wallet will most likely deliver on their goals. The options available are open-loop and closed-loop wallets each with pros and cons.

Open loop wallets allow customers to make payments at any point-of-sale device. Closed-loop wallets can only be used to pay for the goods and services the issuer offers.

2. Specify the features you need

Mobile wallets have many potential functionalities, including payment, loyalty programs, access to financial services and budget trackers. Behind-the-scenes priorities would include an easy onboarding process, easy navigation through the different functionalities of the app and simple payment mechanisms.


At the outset, a business needs to specify which features are non-negotiable for the development and launch of the wallet. Other features can be added when required if the technology driving the app allows for flexibility.


3. Choose the technology building blocks

The digital core of mobile wallets comprises different platforms and applications. All elements of this composable technology infrastructure must be carefully chosen to provide a consistent and quality user experience.


4. Develop and test the wallet

Once the technology building blocks have been chosen, the digital wallet must be built and rigorously tested before going to market to identify any glitches or sub-par performance.


The main challenges in launching a mobile wallet for e-Commerce

Customers set a high bar for the wallets they choose, and if something goes wrong or the experience isn’t what they expected, they’ll likely stop using it. Thus, companies developing mobile wallets need to overcome the challenges potentially standing in the way of success if they want to reap all the rewards offered by mobile wallets. These include:


Getting the technology right

The technology architecture underpinning any mobile wallet is complex and sophisticated, but the user interface must be seamless and straightforward. Therein lies the challenge. If you don’t get all the moving parts to deliver an exceptional outcome, creating a mobile wallet could be more expensive in terms of reputational loss than just the development costs.


Maximizing security

Security is not a nice-to-have in financial services and eCommerce; it’s a must-have. One data breach would do severe reputational damage to the company’s image, and it would fall foul of the regulations, particularly those protecting personal information. Staying one step ahead of the criminals isn’t easy because they are continually becoming more sophisticated. Thus, the wallet’s encryption software and security protocols must be the best globally before going to market and then regularly assessed afterward.


Regulatory compliance

Mobile wallet payment solutions are subject to stringent financial services regulations, including the Payment Card Industry Data Security Standard (PCI DSS) and the General Data Protection Regulation (GDPR). The rules are complex and constantly changing, making it a challenge for companies that don’t have the right resources or focus to remain compliant.


User adoption

Competition is intense in eCommerce, and persuading users to adopt your mobile wallet will not be easy. A lot of time and effort – as well as innovative thinking - needs to go into what makes your proposition different and how it stands out in the crowd. Then it’s about persuading targeted customers to try it out.


Choosing the right vendor

Your success in overcoming these challenges depends on choosing the right vendor to partner with to launch your mobile wallet. But how do you go about that? First, you need to select a partner with the right experience, credentials, and specialist skills.


The vendor should also satisfy the following requirements:

  • The capability to provide end-to-end delivery of a mobile wallet.

  • A ready-made but customizable mobile wallet software solution.

  • The ability to get you to market quickly and cost-effectively.

  • The agility and innovation to adapt and scale your mobile wallet functionalities when market conditions change.

  • Best-of-breed security technological expertise and solutions, including multi-factor authentication, encryption, role-based access, audit capabilities, AML, and KYC expertise.

  • The resources to provide sufficient and consistent training, technical, and maintenance support.

Velmie is a banking software solutions company with many years of experience offering modern and scalable FinTech products, including mobile wallet solutions for eCommerce businesses. It provides the best balance of cost-effectiveness and customization and can get you to market quickly with its configurable standalone mobile wallet software modules.


So, if you are looking for end-to-end delivery of customer-centric wallets, Velmie offers all these capabilities and more. It also has all the experience and expertise needed to build a unique, future-fit mobile wallet to meet your specific business needs.


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