Digital Wallet: The revolutionary partner in mobile payments and online transactions.
The rising online transactions, including mobile payment, paved the way for the rise of digital wallets that ensure a secure and easy payment.
It would take a long time before cash and credit card transactions become obsolete. In fact, the mere idea of it seems inconceivable-maybe before but the time is changing. While the prevalence of cash and credit cards is still high, the chance of the two maintaining the top spots on the mode of transaction is no longer that solid. It would take a lot of time to completely replace cash as the primary mode of transaction, but who knows, the "third player" might just succeed in doing it. But realistically speaking, and as of the moment, it exists hand in hand with the two while attracting an increasing number of users.
As of the moment, the "third player" in this "field" is slowly gaining traction. With the continued advancement of technology and the rise of smartphones, the penetration rate of this transaction mode sees unprecedented figures. In fact, some countries are showing accelerated growth.
If you are thinking of digital wallets as the "third player," then you are right. This "third player" is the new trend attracting consumers, investors, or almost everyone. And that is unsurprising given the benefits and convenience it offers. And so, coupled with the effect of word-of-mouth, the rising rate of mobile payment activity and online transactions, the use, and prevalence of digital wallets is also rising.
Digital wallets offer a convenient and alternative way of paying for the goods and services you availed. With a simple click or scan using your smartphone, you can pretty avail yourself of anything; just make sure that your digital wallet has sufficient funds or that your bank account is connected to it. Additionally, make sure the one you're transacting with accepts digital payment.
Digital wallets can also exist in desktops, and this is the trait that somewhat differentiates them from mobile wallets. Though available on desktop, the smartphone counterpart are more used and more popular. So, in essence, these digital wallets are almost like mobile wallets.
A digital wallet is a new wallet that you should try. If you are interested in a digital wallet and want to know more about it, continue reading. In this article, we will feature digital wallets. The types of it, its benefits, and the reasons why you should use it.
What is a digital wallet?
The term "Digital wallet" frankly explains itself and is thus almost self-explanatory. To simply put it, it is a wallet in digital form. Unlike traditional wallets that are directly located in your pocket or bags, this wallet is found in your smartphone through the applications you downloaded.
But in a more "academic" description, a digital wallet, also known as an electronic wallet, is a software-based system that stores users' payment information, purchase descriptions, and passwords for different websites. It allows users to easily and quickly complete a purchase and other transactions through near-field communication technology. It is also relatively secure as it enables users to generate or create passwords without worrying that they would forget them later on since they can still access their accounts through other means.
Digital wallets are commonly used for mobile payments for purchase and services, but aside from these, they can also be used in investing, banking, government transactions, bills payment, and others. It can also be used to redeem rewards, coupons, loyalty benefits, and others.
Types of Digital Wallet
Not all digital wallets are the same. Some offer features that others don't, some requires bank other while in others it is optional. But these are not the defining characteristics that divide digital wallets; that "honor" goes to the "scope." The three types of digital wallets based on this are:
1. Closed Wallet. A closed wallet is the "exclusive" wallet. This wallet is developed by specific companies that sell products and services. As it is developed by them, it is exclusively used for them. Users of this wallet type can only do transactions with the company that issued or developed it. Any cancellation, return, or refund is stored and available in the wallet. One famous example of this wallet type is Amazon Pay.
2. Semi-closed Wallet. A semi-closed wallet is like a bigger closed wallet. Users who use this wallet can make transactions with more than one company, provided that the company or merchant they transacting to is one of the listed companies, merchant, or location. Companies and merchants who want to be part of a "list" need to enter into an agreement or contract with the issuer of the wallet. Although the wallet seems restrictive regarding its coverage, it still has more benefits since they can transact more and do both online and offline buying.
3. Open Wallet. An open wallet is the least restricted among the wallet types. This kind of wallet comes from banks or institutes that partner with other banks. Users of this wallet can do the same transactions available with users of semi-closed wallets. But one main difference between the two is that the former allows withdrawal of funds from banks and fund transfers.
How does a digital wallet work?
A digital wallet works like a physical wallet but with added benefits. But unlike the traditional ones, it eliminates the need for you to carry it because the wallet is stored in your smartphone. By setting up an account and by funding it, you can easily and efficiently conduct a cashless transaction, provided that the store you are dealing with has a mobile payment system on its end. You can fund it independently (top-up), or you can connect your bank account to it.
Why do digital wallets become popular?
There are lots of reasons why digital wallets have become popular. These reasons are different for different groups of people.
For the larger population.
· It facilitates cashless transactions that are both secured and convenient.
· It gives a chance for the unbanked and underbanked to participate in the global financial system
· People can use it with or without bank accounts
· It is less risky than traditional wallets because of its security features, including two-factor authentication, pins, encryption and virtualization techniques, and others.
· They can use a digital wallet for sending and receiving remittances from their relatives and friends.
· Companies can possibly benefit from digital wallets through the data they store. These companies are those that collect consumer data, and the more they know about the consumers' habits, the more likely their market strategy will be effective.
· Some digital wallets, through a partnership with other entities, allow users to invest in different funds.
· Some cryptocurrencies rely solely on digital wallets for their related transactions.
· Some digital wallets can be used for government transactions and payments, and thus government offices will have fewer walk-in customers
How to set up my digital wallet?
Digital wallets are not that complicated, in fact, it is easy to use and easy to set-up. If you want to have your own digital wallet, you can follow the steps below.
1. Download the digital wallet you want.
2. Open the downloaded digital wallet and connect it to your phone number.
3. Fill in the necessary information like name, birthdate, birthplace, any national ID, your picture, and others.
4. Create your pin
5. Connect your bank account, or you can opt for a top-up
6. Finish and check your account
Note: The order of the steps might not be the same as other digital wallets. Some wallets allow identity verification and banking information to be verified later depending on the user's preference, while others require immediate identity verification. In the case of those that allow later identity verification, the services and features they offer are minimal and extremely limited, and thus less convenient.
Other Practical Benefits of Using Digital Wallets
1. Secured information. The information stored in digital wallets is heavily encrypted.
2. Less time-consuming. One of the popular practical benefits of a digital wallet is that it is less time-consuming. People can finish a purchase while holding their smartphones.
3. A less bulgy physical wallet. It became a habit for some to put everything related to a transaction in their wallets, putting a bulge in the process. Through digital wallets, wallet bulge can be avoided since aside from money, digital wallets can also hold coupon, gift cards, loyalty cards and other.
Are Digital Wallets Safe?
It is wise to question the safety of applications that requires you to provide personal and sensitive information. Hence, hesitance on using a digital wallet is acceptable and unsurprising. However, if you plan to use a digital wallet but wary of security, this should put you at peace. Most digital wallet applications are considered safe. The information stored in your wallet is in a safer "situation" than those you keep in your physical wallet, which can be snatched anytime.
The security features of digital wallets are one of its selling points. Unlike physical wallets, digital wallets need pins, two-factor authentication, and other verification forms before you can access them. In addition, your information is heavily encrypted. This heavy encryption makes your data secured and hard to compromised if the store you transacted with experienced a leak.