What are closed-loop wallets? 💰
Up until recently, the first thing you would imagine when you hear the word ‘wallet’ would be a physical pouch with compartments containing your cards and other personal items. However, in digital terms, a ‘wallet’ is a customer’s balance embedded electronically which is used to pay for your retailer’s transactions via your connected device, such as a mobile app. Just as credit cards inside your physical wallet can be used to make payments, a digital wallet allows you to make payments where the wallet is accepted.
An Open-loop wallet is a centralised platform that allows users to pay at many different merchants. Open wallets usually process payments by connecting to consumers’ personal bank account or by using their credit card details., e.g., PayPal.
Closed-loop wallets allow consumers to pay for transactions at those retailers who are part of the wallet ecosystem. Customers prepay funds into their wallet account linked to their phone and have benefits associated with being part of the wallet system. e.g. rewards, special offers, discounts and more.
Why now? 🧑💻️
Business models in commerce have developed significantly over the past few years, while payments haven’t quite caught up, resulting in high processing costs. Fixed fees for payments, such as card network schemes and payment gateway fees, represent a significant percentage of the transactions’ amounts, sometimes higher than 3%. This negatively impacts unit economics even for large transactions, while making some smaller transactions loss-making.
On the tech side, new developments such as Open Banking as well as new solutions enabled by Web3, blockchain and decentralised models provide new opportunities to innovate and modernise payments by making them seamless and more efficient to all participants of the ecosystem. These developments are also supported by favourable regulations such as the UK New Payments Architecture.
WyzePay: Benefits for All
At WyzePay we are inspired by the future of payments and believe that payments should not be a hurdle but rather a tool for commerce, benefiting both merchants and customers. For merchants, offering their customers a wallet has several advantages:
- Decreases internal transactions costs and improves unit economics
- Drives customer retention by offering them loyalty benefits associated with using the wallet
- Increases and unlocks new revenue verticals from existing as well as new customers
- Helps to leverage cash flow, capital advancement and advance sales capabilities
- Helps merchants to understand their customers better by gathering data about consumer spending habits and to boost loyalty to a certain brand.
Our features are specifically beneficial for merchants offering habitual use transactions, e.g., coffee shops, restaurants.
🎁 The benefits for consumers include:
- Getting discounts at their favourite merchants
- Being rewarded upfront for their loyalty
- Ability to gift and transfer their prepaid benefits to their friends and other consumers in the network.
WyzePay is actively partnering with merchants from various verticals and offers one wallet from which consumers can pay for all of their everyday purchases: be it a business lunch or a coffee treat ☕️
📢 Stay tuned: we have much more coming!
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Check our website to learn more about WyzePay.