Stepping into the digital wallet age

More and more people are cashless and cardless

For consumers who use digital wallets for transactions at the cash register, paying with the swish of a mobile device is more convenient than handing over a credit card or cash.

A digital wallet allows consumers to make electronic payments from devices linked to their bank or credit cards through an app. Those apps include Apple Pay, Android Pay (formerly Google Wallet) and Samsung Pay.

Many national retailers such as Target, McDonald’s and Starbucks use them. Madison storeowners also recognize the benefits.

“We see a lot of companies doing this,” says Ben Udell, senior vice president of consumer banking at Monona Bank. “Many of them are installing new terminals to meet requirements for credit card chip readers, and those new terminals have the capability for Apple Pay or digital payments. A lot are doing it at the same time.”

Some consumers are hesitant to try digital wallets because of security risks and potential fraud. However, Udell says the service is not only convenient, but chances of fraud decrease because transactions are encrypted.

About $620 billion in transactions were made through mobile payment systems in 2016, according to Statistica, which provides data analysis. A Statistica report projects that sales could reach nearly $1.1 trillion by 2019.

Perhaps not surprisingly, those younger than 30 are most likely to use the service.

“They’ve grown up with a phone in their hands,” says Mike Bahneman, manager at Capitol Centre Market, a downtown grocery store. “Very few people are using cash.”

Those looking to use an e-wallet to buy a cup of joe at Sunroom Cafe will have no problem. The shop activated the service more than a year ago with a new charge card chip reader.

“The way I figured it, it’s a feature of the machine, so why not?” says Sunroom owner Mark Paradise. “Being on campus, we cater to a very tech-savvy group of people.” In fact, he says, a customer recently told him he doesn’t carry cash or cards at all.

Katie Peterson, cafe coach at Stone Creek Coffee on East Washington Avenue, says the store someday would like to offer a full digital-payment system. “We have people asking for it,” Peterson says.

Virtual Payments

Stepping into the digital wallet age

Mike Bahneman, store manager for Capitol Centre Market, answers questions about accepting digital payments in this edited Q&A.

When and why did you begin to offer Apple Pay?

It’s only been a few months. We did it to stay current. Very few people use cash these days, it’s mostly credit or debit cards. This is the next step. It allows them to pay without carrying a card at all. We offer Apple Pay and recently added capability for Android users.

Who is most likely to use the service?

Definitely (University of Wisconsin-Madison) students. Also, young professionals. I like it because not a lot of our students use cash, and it’s more secure than cards. They don’t necessarily seek us out because of it, but they’re happy to see we have it.

What are the challenges businesses might face in launching the service?

Because it’s relatively new, a lot of front-end systems aren’t compatible with them and upgrades could be pricey. Businesses are buying technology or software for the credit card chips because they have to by law, but this isn’t required by law. As far as Apple Pay, I think that is what younger customers are moving to, so it makes sense to have it, especially for bigger businesses.

Patti Zarling is a writer based in Green Bay.