e-Wallets make it simple to make prompt payments online or in person as it has been revolutionised by cutting-edge technology. Additionally, payment methods have evolved substantially over time. While corporations utilised technology to serve customers better and conveniently, payment digitisation was crucial in attaining these objectives.
This concept has reduced many of the challenges connected with traditional monetary transactions. Digital payment enables transactions to be simpler, safer, more accessible, and more secure than ever.
What is an e-Wallet?
e-Wallet meaning: As the letter ‘E’ indicates, an e-Wallet is an electronic wallet. e-Wallets, often known as digital wallets, make it easy for users to perform transactions. The wallets can be used online and in stores for simple transactions.
e-Wallets make it simple to make prompt payments online or in person.
In addition to buying train/flight tickets, paying energy bills, reserving gas cylinders, and paying school fees, mobile wallets can also recharge mobile phones.
To begin utilising e-wallets, load them with funds from a linked bank account or credit or debit card.
These wallets are secure and suitable for minor to substantial transactions.
A smartphone, a payment app, and an internet connection are required for digital wallet transactions.
How does e-Wallets work?
The majority of e-wallets are built primarily to enable payment processing. B2C payments, notably on e-commerce platforms, are the most prevalent use case for e-wallets in the western world, followed closely by mobile point-of-sale transactions.
In addition to e-commerce-focused digital wallet systems, solutions are specialised for certain businesses or industries. e-Wallet software handles B2B wallets for international transactions and peer-to-peer systems for value exchange.
e-Wallets utilise the following technologies:
1. Near-field communication (NFC)
Near-field communication is a method that links and transfers data between two smart devices via electromagnetic waves. There must be a distance of 1.5 inches (4 cm) between the two devices for them to communicate.
2. QR codes (Quick Response Codes)
Quick response codes are matrix barcodes that store information. You use your device’s camera and the wallet’s scanning technology to pay.
3. Magnetic secure transmission (MST)
This is the same method used by magnetic card readers to read your card when you swipe it through a slot at a point-of-sale terminal. This information is generated by your mobile device and can be read by the point of sale.
Digital wallets are applications that utilise the capabilities of mobile devices to make financial products and services more accessible. By storing all of a consumer’s payment information securely and compactly, digital wallets eliminate the need to carry a traditional wallet.
Digital wallets utilise the wireless capabilities of your mobile device, such as bluetooth, wifi, and magnetic signals, to securely transmit payment information from your smartphone to the point of sale that can read the information and connect via these signals.
What are the different types of e-Wallets?
e-Wallets serve different purposes depending on the business and end-users. Issuers provide the following sorts of e-wallets to end-users for specific purposes:
1. Closed wallet
- A closed wallet allows customers to make payments through an app or website.
- Typically, enterprises that sell products or services to clients generate them.
- Users of a locked wallet can only transact with the wallet’s issuer using the saved funds.
- The total value is saved in the wallet when a transaction is cancelled or refunded.
2. Semi-closed wallet
- A semi-closed wallet enables users to conduct transactions at listed merchants and places.
- A semi-closed wallet’s coverage area is limited.
- To accept payment from the wallet, retailers must accept the issuer’s contract or agreement.
3. Open wallet
- Banks provide open wallets.
- With open wallets, any transaction can be carried out.
- Open wallets facilitate the transmission of cash.
- At any moment, payments can be made both online and in-store.
- However, both the sender and the recipient must have accounts on the same programme.
4. Crypto wallet
- The public and private keys of users are saved in cryptocurrency wallets.
- The keys could be ownership certificates for cryptocurrencies.
- Hardware wallets, also known as cold wallets, provide an additional layer of protection and security.
- To operate offline wallets, you can use a USB stick.
- These wallets permit bitcoin transactions.
IoT wallet
- The Internet of Things is abbreviated as IoT.
- These are embedded in watches, jackets, wristbands, and other wallet-enabled products, including smart car computers and refrigerators.
- IoT wallets are compatible with e-money and digital currencies.
Pros and Cons of e-Wallets
Pros:
Convenience
Since it is accessible from your mobile, it is more convenient to transport and frees up pocket space. Additionally, the digital wallet can store different kinds of cards.
Extra backup
You can still make payments at most retailers if you forget your wallet.
Safety
Digital payments provide the added security of data encryption and tokenisation, making them safer than traditional debit or credit card transactions in numerous ways.
Cons:
You will find some limitations to its use
Not every merchant or individual to whom you wish to transfer money accepts digital wallet payments, and the necessary technology may not yet exist.
Relies on the device
If the device on which your digital wallet is kept runs out of battery or you lose access to it for any reason, you will also lose access to your digital wallet.
How do e-Wallets differ from crypto wallets?
Crypto wallets differ from digital wallets, essentially electronic versions of what you’d carry in a physical wallet. They keep the necessary keys for purchasing and selling cryptocurrency. Simply put, the primary use of a digital wallet is to pay for commonplace products. Cryptocurrency buyers often utilise a cryptocurrency wallet.
A smartphone and cryptocurrency wallets share certain similarities. Similar to mobile wallets, crypto wallets allow you to pay for goods and services at locations that accept bitcoin. And both wallets are considerably safer than carrying a credit card.
However, all the information required for either wallet is stored online and, therefore, susceptible to hackers. Cards and accounts in a digital wallet are often FDIC-insured or have fraud protection via the financial institution, but cryptocurrencies remain mostly unregulated.
Conclusion
There are numerous sorts of digital wallets or e-wallets that are meant to serve distinct objectives. Digital wallets, also known as e-wallets, are often integrated with payment programmes; however, they can also be downloaded independently from an authorised site as e-wallets. Always download the payment application or e-wallet from the authorised platform in addition to the Google Play Store or the Apple App Store. It is highly discouraged to download an electronic wallet or payment wallet from a third-party app or website.
FAQs
1. What is e-wallet?
Ans: Digital wallets let you use your bank account to pay for things on your computer, smartphone, or other smart device. In the end, they make it less important to carry around a real wallet.
2. What are the different types of e-wallet?
Ans: The different types of e-wallets are:
a. Closed wallet
b. Semi-closed wallet
c. Open wallet
d. Crypto wallet
e. IoT wallet
3. Which is not the example of e-wallet?
Ans: BHIM is not an e-wallet.
4. What are the advantages of an e-wallet?
Ans: The advantages of e-wallet are:
a. Convenience
b. Extra backup
c. Safety
