What are digital wallets? This question has been bugging your mind because you, too, have heard about these convenient little attributes. Digital wallets can either be used to exchange money and are preferred due to their convenience.
If you want to send payments to your loved ones, make payments for services you have rendered to a certain business or organization, and transact any other monetary transaction, then a digital wallet will give you what you need. This electronic tool already has integrated security features that make it safe to transact any financial transaction online. It also enables the owner to make payments online using a secured connection.
What is Digital Wallet?
A digital wallet refers to the fact that this technological innovation is a new type of web-enabled wallet which is capable of holding and transferring money in any type of digital currency. The way in which digital wallets work is rather simple and not all that different from conventional wallets. Different digital wallets may have different security settings, which allow users to choose what information they would like to allow others to view, and thus allowing them to control what is available to others.
A digital wallet also called an e-Wallet, is a digital device, usually an online service or online software program that enables one party to create electronic transfers of value between themselves and another party, typically for products and services sold online. There are several different digital wallets on the market today, and they each have their own benefits and features. Some digital wallets are designed to be used with either a credit or debit card, but most users prefer to use their debit card for added security and privacy. Most of these e-Wallets contain encryption programs that allow users to transact business on the Internet without fear of their cards being stolen. An example of a digital merchant wallet is the PayPal digital wallet.
How Does a Digital Wallet Work?
Digital wallets are becoming more popular as more retailers realize how convenient it is to process payments using these secure and easy-to-use devices. Not only do these devices eliminate the requirement for traditional Point of Sale systems, but they also offer merchants access to payment processing through secure internet connections.
Most digital wallets operate similarly to an app. An example of this would be PayPal. The way how does a digital wallet work basically begins with the merchant creating a special Internet application that connects their merchant bank account and their payment-processing company. The application allows customers to pay for items or make in-store purchases with a minimal amount of effort. The customer is simply prompted to scan their fingerprint image or any other biometric information required to complete their transaction. This data is then sent wirelessly from the device back to the merchant's bank, where the transaction gets processed.
Different digital wallets have different methods of processing transactions. Merchant services may also include a mobile app that works much like the in-store version allowing customers to make purchases and enter their payment information directly from their smartphones. Depending on the kind of digital wallet and the merchant's service options, a quick overview of how does a digital wallet works may help to determine if this type of payment processing is right for a business.
Benefits of Using Digital Wallets
Yes, electronic payment is simpler than a traditional payment. And it is undeniable that a digital wallet is more convenient to use than any other conventional wallet. Let us discuss the digital wallet advantages and the features (merits) of a digital wallet.
- Faster Transactions
Since you need not carry physical cash or check with you, a digital wallet makes the transfer of funds quite fast. Also, since transactions are done through a secure gateway, transaction fees are almost nonexistent or are negligible in the case of a mobile wallet.
- Payments on the Go
But let us not forget the other digital wallet advantages and features. In this day and age, mobile wallets are also very popular. Mobile wallets are basically wallets designed to be used on mobiles. These are convenient because you can go anywhere (not within your possession, of course) and still make online payments.
- Secure Medium
Digital wallets also provide mobile users with extra security since they do not store passwords, pin numbers, or other sensitive information, unlike conventional wallets that allow people to access their account information. One of the main perks of a digital wallet is the ability for users to set up a password that must be used to access the funds contained in the digital wallet.
Written by Farooq J. Khalil
Account Manager, Ottu