Digital Wallet vs. Credit Card: What Payment Methods Should You Accept?

Hamilton Kiah
Hamilton Kiah
April 15th, 2021
Estimated read time: 4 minutes, 48 seconds

Remember when PayPal first came on the scene? Well, you might not because you were probably in high school … or maybe even elementary school. But 2000 was a big year for PayPal. In March of 2000, they hit 1 million users. Then by September of the same year, they reached 5 million users.

Well, that was 20 years ago. Now, Elon Musk is going to space, and there are tons of digital wallet options available to online consumers.

But how important are digital wallets to online businesses when people still use credit cards? Is it really worth changing your checkout process to accommodate digital wallet users?

Before we answer those questions, let’s take a step back and talk about what a digital wallet actually is.

What Is a Digital Wallet?

Digital wallets are financial accounts that allow users to store funds, make transactions, and digitally track payment histories. Essentially, all of your payment information—name, credit or debit card numbers, shipping address, billing address—is saved in one place and can be used to complete purchases.

Some of the most popular digital wallets are:

  • PayPal – available on all devices and the most widely accepted digital wallet
  • Amazon Pay – accesses payment and shipping information from a user’s Amazon account
  • ApplePay – available on all Apple products (iPhones, iPads, and the Apple Watch) and all information is stored safely on the cloud
  • Google Pay – available on Androids
  • Visa Checkout – owned by Visa, but works with all major credit cards
  • Masterpass – owned by Mastercard, but works with all major credit cards

While it may vary based on the digital wallet, the service works in two distinct ways. The service may allow users to “store” money on their devices, which they can then use to complete purchases. Alternatively, the service stores a user’s bank or credit card information in the app and takes money directly from a financial account when completing a purchase.

Why Do Customers Love Digital Wallets?


How many of you have your credit card number, expiration date, and CVV number memorized? I’m guessing not many. But how many of you have your email and password memorized? Probably all of you.

Digital wallets make shopping way more convenient. Customers don’t have to dig through their physical wallet or purse anymore and enter 16 + 4 + 3 digits (What is that? A million?) into the checkout form to complete their purchase.

Instead, they can enter their email and password (the most complicated form of verification) or enter a PIN sent to their smartphone. And if they have the newer smartphones, they have the option of simply scanning their fingerprint or face to approve a purchase.


Now that more and more customers are completing online purchases on mobile devices, security has become a concern. Nobody wants to enter their credit card number on the subway or at lunch where data can be compromised.

With digital wallets, no information is passed directly to the online store. The digital wallet completes the purchase through secure tokenization. And there’s no chance the guy sitting behind you can see your bank information.

Online + Offline Functionality

We usually think of digital wallets as being used exclusively for online transactions. But digital wallets can also be used in brick-and-mortar stores too. Yep, you can use your smartphone or Apple watch to complete a purchase in-store, which means you don’t have to carry credit cards or cash while shopping.

What Do Digital Wallets Mean for Online Businesses?

Ecommerce and customer habits are continually changing and evolving. The popularity of digital wallets is a new trend we need to adapt to for long-term success. Meaning, you need to incorporate digital wallets into your checkout process.

Right now, the average desktop conversion rate is 2%. But the average smartphone conversion rate is only 1.3%. This means that online customers are more comfortable completing purchases on their desktop than on their mobile devices. Why? The answer: a poor checkout experience.

In order to improve your conversion rate on mobile devices, you need to give your customers the option to pay with a digital wallet and make the mobile checkout process more convenient and secure.  

Offer Your Customers Multiple Payment Options

If offering digital wallets as a payment method will increase conversion rates, does that mean you don’t have to offer credit card options? No!

Credit cards aren’t going anywhere. While digital wallets are becoming more popular with online customers, there will always be a portion of your audience that prefers to pay with a credit card. So, if you take away the credit card option, you’ll lose those sales, which will hurt your conversion rate.

When it comes down to it, you want to provide as many payment options as possible without complicating the checkout process.

Update Your Checkout Experience

When making any changes to your checkout process, you need to get a developer, sift through your website’s code, and make the necessary updates.

If you don’t have a developer on your team or time to update your website’s backend yourself, you should consider bringing on an ecommerce partner that can help you easily and quickly make those updates.

Many ecommerce partners, like FastSpring, automatically offer multiple payment gateways. So, all you have to do is decide what digital wallets you want to make available to your customers.

An ecommerce partner can also optimize your entire checkout process to make sure you’re getting the highest conversion rate possible on desktop and mobile devices. It took 20 years, but digital wallets are a permanent feature of both online and offline transactions. But then again, so are credit cards. This means your digital business needs to be prepared to accommodate all different types of buyers and their payment preferences. Ready to update your checkout process? FastSpring can help!

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