Digital wallets have gained immense popularity in a short period. But are they safe for you? Read more to learn all the details and benefits of a digital wallet.
Digital wallets have been a small part of the global ecommerce industry for a long time. But only recently, this technology has become a significant system that helps make different transactions possible.
If you have lately come across many blogs or discussion forums on digital wallets, you might be intrigued and interested to use one. We can’t blame you but is it useful and safe for you?
To find an answer, dig into this article for all the facts related to this eye-opening and user-friendly software-based system.
What Is a Digital Wallet?
An e-wallet or a digital wallet is a system that stores a user’s passwords and payment information required for different websites and payment methods. You can also use this wallet to pay for all your purchases through different smartphone apps. Besides, this software works great as a payment platform such as Alipay or Paypal.
An e-wallet can also hold your driving licenses, transportation passes, and gift cards. In addition, it can easily store all your digital coupons and even loyalty card details.
If that wasn’t enough, digital wallets are considered a primary interface for transactions related to cryptocurrency.
Besides, as opposed to a traditional wallet, an e-wallet is relatively easy to use. It is also far more secure and approachable.
How Does a Digital Wallet Work?
In a majority of cases, a digital wallet is housed via a smartphone app. But you can also use it as a physical device or in a different format on your computer. However, the smartphone version is quite flexible and accessible at all times.
There is a variety of digital wallets, and each follows a specific technology to operate. Here is a summary of different mechanisms:
- Magnetic Secure Transmission: Have you ever swiped the magnetic strip featured on your credit card? The process produces a unique magnetic signal, and that’s what this technology does too. This generated signal travels to the card reader at the payment terminal, and that’s where your purchase ends.
- Near Field Communication: This technology permits an exchange of information between two closely-placed devices. However, to use a digital wallet with this technology, the merchant should have a compatible reader at the checkout point.
- QR Codes: You can use your phone’s camera to scan these barcodes and make a payment. But first, you should generate a specific QR code that allows you to pay for different transactions through your account.
Types of Digital Wallets – How to Pick One?
If you are a non-technical person, you might find the concept of a digital wallet a little intimidating. But in reality, this software is pretty simple and convenient to use.
However, there are several e-wallets available, and not every option would work for you. For instance, the Paypal One Touch is a digital wallet app that helps you make payments to any ecommerce store without logging on the screen or going through tedious password entering processes. It is also available through Google Play and Apple Store.
But, Paypal Pay charges a fee on credit card transfers, which might be a major disappointment for many users.
On the other hand, digital wallets apps like Apple Pay, Samsung Pay, and Google Pay allow smooth experiences and help carry streamlined transactions. However, you can’t have these apps without their compatible phone. For instance, Samsung Pay will not work on your IPhone, and in that case, you will have no choice but to choose Apple Pay.
The choice of your e-wallet also depends on the type of ecommerce store. For instance, many merchants still do not support digital wallets, so you will have to use your debit or credit card to complete the transactions in such situations.
Using Your Digital Wallet
Here’s how you can use your digital wallet:
- Firstly, you need to download a specific digital wallet application on your phone. However, before you take this step, ensure the app’s authenticity and then provide your financial details to the company.
- After a successful payment, you need to look for a point of sale (POS) system that works well with your chosen digital wallet.
You will most probably be able to identify this system through a contactless symbol during checkout. Moreover, some POCs also let you pay through the Magnetic Secure Transmission technology.
- Once you have successfully found a compatible POS, hold the phone close to the sales terminal and make a payment. You also have the option to pay easily through the mobile app.
- If you can find a compatible ATM close to your location, this rule can also apply for cash withdrawals.
Is it Safe to Use an E-wallet?
Technologies that involve using a person’s sensitive information always create suspicion and fear in the consumer’s mind. However, with digital wallets, you do not have to worry much about your security.
This system has a built-in tokenization feature that hides your debit or credit card number while you make any payment. So, instead of receiving a card number, the merchant gets a one-time-use token containing many random numbers. This token helps complete the transaction without revealing any personal information.
In addition, it isn’t easy to access a digital wallet, anyway. You need to provide biometric information or a secret pin to access this system.
Benefits of Digital Wallets for Users and Retail Stores
We have already discussed how many people use their digital wallets to make even the most complex transaction quick and easy.
Moreover, a cryptocurrency is solely dependent on digital wallets to make transactions and maintain balance.
In addition, these wallets do not demand any organization or added security from your side, which makes them perfect for busy individuals.
Interestingly, many physical stores are also finally accepting and utilizing this technology for their benefit. Here’s how:
- Physical stores use e-wallets to collect consumer data. This system is relatively useful in understanding the consumer’s buying behavior which then helps to implement marketing strategies accordingly. However, during this process, the customer does suffer a loss in their privacy.
- Most people abandon their purchases because of long additional authentications. But with digital wallets, retailers don’t have to annoy their potential customers with these cumbersome processes. This benefit helps increase the chance of a successful sale leading to revenue.
- By encouraging customers to use their digital wallets, physical stores get a chance to improve their authorization rates with banks. Issuers authorize payments made with digital wallets, which helps increase this rate by almost 10%.
Summary
Now that you know what a digital wallet is, don’t stay behind and make your purchases much more convenient than before. There’s nothing better than becoming technologically advanced and aware.
However, regardless of the security this system provides, caution is always necessary. For instance, if you use your digital wallet in a public place, don’t reveal your phone’s screen to everyone. Besides, refrain from sharing your e-wallet details with a friend or even a family member.
