If you engage in online business or carry out digital payments, then it is very likely that you have heard of digital wallets. A digital wallet is also known as an electronic wallet or e-wallet, and it is a payment application that runs on mobile devices for financial transaction purposes. A digital wallet or app is used to store your debit and credit card information, as well as bank account details so that you can simply make payments with your mobile phone without carrying physical cards or cash around.
With your debit/credit card details and passwords stored on e-wallets, you can pay for goods and services at local and online stores with the tap of a button. You can even send funds to friends and family members who have or don’t have bank accounts – since you do not necessarily require a bank account to utilize digital wallets – you only need a smartphone. This means that people with no bank accounts can use their mobile phones to make electronic payments easily.
How do Digital Wallets Work?
E-wallets work by storing the financial numbers and passwords of your debit and credit cards for digital payments. With the stored card details, you no longer need to carry physical cards or cash around – you can make digital payments directly from the financial payment app. This means you can still use your card details even after the physical cards get lost or stolen, and you can deactivate the cards directly from the app.
If you want to use an electronic payment transfer after purchasing items in a shop, the app connects with the POS terminal the retail store uses to accept payments for the transaction to go through. E-wallets utilize the Bluetooth, Wi-Fi, QR bar codes, near-field communication (NFC), and magnetic secure transmission (MST) technologies of your mobile device to complete the transaction.
Is it only the Debit and Credit Card Details you Store on Digital Wallets?
If you are wondering whether it is only debit/credit card or bank details they store on digital wallets, the short answer is – no. You can store other personal security details on e-wallets and some of these include:
- Membership Cards
- Gift Cards
- Loyalty Cards
- Event Tickets
- Plane and transit tickets
- Hotel reservations
- Driver’s license
- Identification cards
- Car keys
Types of Digital Wallets
There are many types of digital wallets in the market today, but some of the most popular are the following;
- Google Pay
- Apple Pay
- Meta Pay
- Cash App
- Samsung Pay
- Walmart Pay
With cryptocurrencies getting widely accepted by online merchants worldwide, there is also the BitPay wallet for storing cryptos. It must be noted that some digital wallets such as Apple Pay and Google Pay allow users to store cryptocurrencies for digital payments on their apps. Meanwhile, mobile phone browsers are integrating e-wallets for fund storage in their apps, and many of them are allowing the storage of cryptocurrencies for transaction purposes.
Are Digital Wallets Secured for Online Use?
Digital wallets use advanced end-to-end encryption technologies to safeguard the security of your digital transactions. Since the digital apps are downloaded from trusted sources such as Google Play Store or App Store and resident within your password-protected mobile smartphones, you are usually the only person that can access them for use through fingerprints or iris scans.
Most e-wallets also have two-factor authentication one-time PINs for improved security, and you can also activate additional security protocols available in the apps and in your mobile device. However, it is best to devise a way to disable your smartphone if it ever gets lost or stolen and to be able to monitor your financial accounts for suspicious activities. Do not forget to use different alphanumeric passwords for different apps and services on your phone so that no one using guessed right can use the same password to access other related services on your phone.
Merits of Digital Wallets for Online Transactions
The major benefit of digital wallets is the ease of use. There is also enhanced security since you won’t have to carry physical financial cards or cash around on your person. It also pays to send money to loved ones who do not have physical bank accounts – so it can be used to send, receive, and facilitate remittances without bank accounts. And you can back up your sensitive passwords in case you forget passwords or your device gets stolen. So you and your business have a lot to benefit from digital wallets in 2022 and beyond.