As the preferences of customers continue to change the payments landscape, many merchants are looking to upgrade their checkout experience with mobile wallets like Apple Pay, Google Pay or Samsung Pay.
Yet, in a recent market survey, merchants indicated a reluctance to accept mobile wallets because they perceive them to be higher cost (26%) and less secure (22%).
The reality? Mobile wallet transactions cost the same as standard credit card transactions—and they often deliver superior security and convenience.
Understanding the Cost Structure
Seventy to eighty percent of credit card processing fees are primarily driven by interchange rates, which are set by card networks (Visa, Mastercard, etc.). These rates depend on factors like:
- Card type (credit vs. debit, rewards vs. standard)
- Transaction method (card present vs. card not present)
- Merchant category (retail, food services, professional services, etc.)
Here’s the key point: mobile wallet transactions are classified as card-present transactions when they are conducted in person, just like a chip-and-PIN or swipe transaction. That means:
- No extra interchange fees for using mobile wallets in person
- No additional processor markups beyond standard card-present rates (some processor pricing policies may differ)
Now this begs the question, what about mobile wallets that are accepted through ecommerce sites? Well, those mobile wallets would be classified as card-not-present transactions, BUT the merchant would not incur any additional fees on top of their card-not-present rates.
Security Advantages
Mobile wallets aren’t just convenient. They’re among the most secure payment methods available. Why?
- Tokenization: Replaces sensitive card data with a one-time-use token, so actual card numbers are never exposed
- Biometric Authentication: The customer uses fingerprint or facial recognition on their mobile device, which adds another layer of identity verification
- Dynamic Encryption: Each transaction uses unique cryptographic keys, making data interception nearly impossible
These features significantly reduce fraud risk compared to magnetic stripe or even chip transactions.
What This Means for You
- Customer Experience: Customers can make payments quickly without carrying cash or cards.
- Fraud Reduction: Tokenization and biometric authentication make mobile wallets safe to accept
- Futureproofing: The US mobile wallet market is projected to reach $6.77 billion by 2032
Learn More
If you’d like to dig even deeper into current trends for payment processing, please download our full payments report, which explores merchant perceptions, fraud trends, and actionable strategies for modernizing payment acceptance. You can also contact us to discuss your current processing environment directly with one of our team.
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