Digital wallets are the product of the latest technology, and they are rapidly growing because of their versatility and ease of payment options. A report by FIS Global shows that by 2024, digital wallets will control 33.4% of point of sale (POS) spending, while cash will only make up 12.7%.
What is a Digital Wallet or E-wallet?
A digital wallet, or e-wallet, is a payment option for mobile applications you use on mobile phones or tablets. It helps users perform payments without needing physical debit or credit cards. Digital wallets make online payments quick and easy by eliminating the need for users to enter their card and billing information manually. Users of digital wallets can frequently store other important documents digitally and view payment histories.
What are the types of Digital Wallets?
The digital wallet market is highly competitive and growing, which is why many companies provide digital wallets, such as Apple Pay, PayPal, Amazon Pay, Google Pay, etc. Using these applications, users can pay for both offline and online payments using their respective applications. Numerous banks and credit card companies offer digital wallet features within their mobile apps.
Here, we have listed the most widely used electronic wallets:
- Apple Pay – Apple Pay has become a leader in digital wallets, handling 92% of all transactions by 2020. Apple Watches, iPads, and iPhones can all be used to access their wallet apps.
- Google Pay – Google Pay is a market leader in the digital wallet space, with over 100 million users.
- Paypal – PayPal, with 428 million active users and a market cap of $84.81 billion, ranks among the largest fintech companies worldwide. Its digital wallet platform builds upon its extensive history in online payments.
- Amazon Pay – Amazon, the third-biggest firm in the world and a mainstay of e-commerce, also has a very well-liked digital wallet.
- Click to Pay – Like digital wallets, Click to Pay is an online payment system that lets users pay using previously stored payment information with just one click.
- Samsung Pay – Users of Samsung devices can also set up Samsung Pay, an additional widely used NFC and MST-enabled electronic payment system, with an estimated 16.3 million U.S. users in 2023.
What can you store in a digital wallet?
While mobile wallets are a subset of digital wallets, they are primarily used on mobile devices; digital wallets may be accessed from a computer.
With digital wallets, you can use your device to make payments while shopping, eliminating the need to carry your cards. You can use your device to make payments after entering and storing your bank account, credit card, or debit card details.
Moreover, digital wallets can store:
- Gift Cards
- Membership cards
- Loyalty Cards
- Discounts
- Event passes
- Tickets for flights and transportation
- Bookings for hotels
- License to drive
- Identity cards
- Vehicle keys
How do digital wallets work?
Users of digital wallets must first choose the stored payment method they wish to use after unlocking the wallet app with a PIN code, facial recognition, or fingerprint identification. Once customers have activated their preferred mobile wallet and chosen the payment method from within to use for the purchase, they will proceed with the business’s online checkout process.
Digital wallets use wireless, Bluetooth, and magnetic capabilities to transfer payment data from a consumer’s mobile device to a payment terminal or card reader enabled for in-person transactions. Users must first unlock their device, choose a payment option, and hold it near the card reader to complete a transaction.
Digital wallets that enable contactless payments usually take only a few seconds to process and are supported by the following technologies:
- Communication in the near field (NFC) – The technology that drives contactless payments most frequently is called near-field communication, or NFC. Without ever making physical contact, NFC securely allows devices—such as smartphones, smartwatches, and some credit cards—to transmit payment information to card readers and payment terminals.
- Magnetic Secure Transmission (MST) – Smartphones that use magnetic secure transmission (MST) technology can send out an encrypted signal that functions similarly to credit and debit card magnetic strips. When a digital wallet with MST is tapped or held at close range (typically a few centimeters), the encrypted payment data is transmitted to the card reader.
- QR codes – Mobile devices’ cameras can scan Quick Response (QR) codes, or matrix barcodes, to start an information transmission. QR codes can make payments contactless, just like digital wallets. The POS terminal or card reader will forward the transaction information to the customer’s payment processor, who will contact the issuing and acquiring banks to complete the purchase once the customer transmits their payment information from their digital wallet using one of the technologies mentioned above.
Are Digital Wallets safe?
Digital wallet security is excellent. The main reason for their increased security is the way digital wallets use a process known as tokenization to transfer data at the point of sale. This is how it operates: The digital wallet creates a one-time code, or token, out of random numbers and sends it to the card reader instead of the customer’s credit or debit card number. Since no card numbers were used (and hence cannot be stolen), payments made using digital wallets will be more secure than those made using traditional credit cards in case of a data breach involving the company or payment processor.
Benefits of digital wallet payments for businesses
The following are some of the benefits of digital wallet payments for businesses and the primary explanations for why so many companies favor digital wallets:
- Sales Have Risen – Digital wallets facilitate a smoother checkout process, increasing revenue and conversion rates. New customers can enjoy the service of digital wallets and make payment methods secure.
- Better Rate Conversion in Mobile – To finish a purchase, customers typically don’t want to take out their credit card and manually enter their payment details into a mobile device. Reduced conversion rates and increased abandoned carts result from not accepting digital wallet payments for mobile purchases.
- Convenience and Ease of Use – Digital wallets are the most convenient way for companies and their clients to pay. Contactless payments from digital wallets can reduce wait times and boost customer turnover. Moreover, in this way, customers will value a quick and easy payment process.
- High-Level Security – Once again, digital wallets are more secure than other card payment methods. The use of tokenization makes it secure and reduces the chances of fraud.
- Rapid customer adoption of digital wallets – Customers are adopting digital wallets. According to a study by Juniper Research, the total number of global digital wallet users is projected to exceed 5.2 billion in 2026, up from 3.4 billion in 2022. According to a Visa survey, 16% of consumers only use digital payment options, and 25% say they plan to switch over the next two years.
Experience Effortless Digital Payments with Cheqly!
A digital wallet is an app for financial transactions that can be used on any connected device. The type of digital wallet most frequently used on mobile devices is the mobile wallet. One of the biggest advantages is that once you have entered the digital wallets on your mobile, it allows you to perform payments through various platforms such as Google Pay, Apple Pay, Samsung Pay, and other digital payments. Digital payments are a strategic and secure choice for businesses seeking efficiency and security in their payment options. With Cheqly, you can also make secure payments, whether it’s by using a virtual debit card for online purchases or by adding your card to popular digital wallets like Apple Pay, Google Pay, and Samsung Pay for in-store transactions. Don’t wait; get your Cheqly’s virtual debit card today. Sign up for a Cheqly bank account today and begin your digital payment journey, streamlining your transactions for a better business future.