Digital wallets — such as Apple Pay and Google Pay, which use near-field communication tags, and Amazon Pay and PayPal, which use QR codes — offer shoppers a contactless method to complete their purchases.
Because digital wallets store encrypted debit and/or credit card information, they also provide consumers with a more secure way to shop and spend. Convenience, too, is another important feature when shopping online, because digital wallets permit users to bypass the need to enter card details when checking out.
This helps explain why 79% of Generation Z consumers have embraced this sophisticated payment method. The use of digital wallets declines with each older generation, reaching a low of 26% among baby boomers and seniors.
But what may be a surprise — and of particular interest to merchants — is that digital wallet users spend, on average, up to one-third more than consumers who use more traditional payment options across all purchases.
These are just some of the findings uncovered in “Tracking the Digital Payments Takeover: Can New Use Cases Drive Consumer Use of Digital Wallets?,” a PYMNTS Intelligence report created in collaboration with Amazon Web Services that surveyed more than 2,500 consumers to learn how and why they use (or don’t use) digital wallets.
The report found that the average retail purchase among digital wallet users is $95, while non-digital wallet users will spend about $81 per purchase. Data also showed that this higher spending is especially consistent in three categories: the average digital wallet user spends about 4% more on groceries, 17% more on retail and 33% more on restaurant purchases.
Travel trends are less distinct. For instance, last October, consumers who don’t use digital wallets spent more on travel than their counterparts. But in the following month, digital wallet users outspent nonusers on travel by 22%. This suggests that consumers divide big-ticket purchases more or less evenly across payment options — for now.
Regardless, the inclination for digital wallet users to spend more suggests that merchants, in particular restaurant owners, may want to consider catering to these consumers, especially Gen Z.
It takes no small measure of optimism to launch a business.
Would-be business owners and entrepreneurs see a chance, as they navigate the application processes, to meet a need in the local community or establish a presence online that can cut across geographies.
Recent statistics from the U.S. Census Bureau, released on Friday (Jan. 10), offer up what would be a sign of optimism in a few key sectors — notably, professional services and construction.
The latest data shows that business applications for tax IDs, adjusted for seasonal variation, reached 457,544 in December, marking an increase of 1.5% compared to November. This represents a de-acceleration from the seasonally adjusted increase in the month prior (a revised 5.7% gain) although it is still a positive indication given that it is only the fourth monthly increase in the whole of 2024.
Projected business formations, which are the estimates of new startups that will result from the applications, were 28,834, an increase of 2.6% compared to November. Projected formations stand 5.8% above the December 2023 level.
Drilling down a bit, retail applications were 79,000, down 9% from November’s levels. But for Business Services (13% of the tally) and Construction (10% of applications), there was positive momentum.
Together with business applications, the bureau also provides projections on the likelihood that a business application turns into an employer business and the consequent number of startups that will derive from these applications. This forecast results in a potential 28,834 business for the year 2025, 2.6% more than forecasted in November.
Professional Services “potential” businesses were up a positive 4.6%. Construction, among the same metric, saw a 3.2% boost.
The read across here is that consumer demand for these businesses — think, for example, of tax services, law firms, design companies and home contractors, including plumbers and painters.
It takes time to get a business up and running. And it takes capital to hire staff, make payroll, purchase or rent the premises in which the small business will operate and buy inventory. Concurrently, while all that is going on, there’s the need and hope to be paid in a timely manner.
In PYMNTS Intelligence data from November, we found that most SMBs do not have access to credit cards. Just 37% have access to any credit cards, with 32% having access to business credit cards. In other words, roughly 5% of Main Street SMBs have to rely exclusively on personal credit cards to fund their business.
The disparity is even more stark between higher- and lower-revenue SMBs. Among firms generating $1 million or more in revenue annually, nearly half have access to credit cards. But a relatively meager 25% of those with annual revenues of $150,000 or less say the same.
Separate PYMNTS Intelligence has noted in past research that for the construction sector especially, that late payments can be a challenge and eventually an existential threat. We’ve found that almost all firms in that sector have been plagued by late payments, and project delays and canceled contracts are just some of the consequences of payment problems.
In the U.S. alone, slow payments in the construction sector have caused a staggering financial impact of $280 billion last year. The data showed that 98% of general contractors reported an increased reliance on personal savings, credit cards and even retirement funds to keep their firms going while grappling with late payments.
Instant payments availability would help smooth those cash flows. As PYMNTS reported on Monday (Jan. 6), construction management platform Knowify announced its integration with Intuit’s suite of financial products for growing businesses, Intuit Enterprise Suite. The integration will provide construction businesses with a single, unified platform through which firms can manage operations, finances and accounting.