Popular Digital Wallets

Types of Digital Wallets

Depending on the device that is used, digital wallets are divided into two categories, device-based and internet-based wallets.

Device-based digital wallets: These type of digital wallets use NFC (Near Field Communication) technology to allow users to pay for purchases by waving their NFC-capable phones or other NFC-capable devices near a contactless reader (which is also an NFC-enabled merchant terminal). There is no need of physically handing over your credit or debit card, but you need a device such as an iPhone, Apple Watch or Samsung phone. Apple Pay and Samsung Pay are examples of device-based digital wallets.

Internet-based digital wallets: This type of digital wallets offer personal user accounts where a user can sign up for an account and store credit or debit card information in it for faster checkout. When the users make a purchase from an e-commerce website, the users first need to register and create an account. After this, they need to sign in to their account and use the saved payment information to pay for their purchase(s). These type of digital wallets allow users to pay for online purchases without providing their card details to the website from which they’re shopping. Google Wallet, Pa Pal and Paytm are examples of internet-based digital wallets. Google Wallet and Pa Pal both offer apps that can be added to compatible phones, allowing them to be used as device-based digital wallets in store.

 

 

Digital Wallet Components

There are two main components of a digital wallet, software component and information component. Let’s briefly learn about these components:

Software Component: The software component provides security i.e. it protects users’ personal information and the actual transaction through encryption. Most digital wallets are stored on the client side. They are self-maintained and fully compatible with most e-commerce websites. A server-side digital wallet, also known as a thin wallet, is one that an organisation creates for and maintains on its servers. It provides enhanced security, efficiency and additional functionalities to the user.

Information Component: The information component refers to a database that is used to store user information such as payment method (credit/debit/net banking), payment details (including card numbers, expiry dates, and security or CVV numbers), phone number, email address, billing address, shipping address and other such information about the purchase. The users can choose whether they want to store payment details or not. Opting to store a card saves the users from retyping the details every time they make a purchase using that card.

 

How Does an E-Wallet Work?

Digital wallets are complex in nature, with many different interconnected functions. This complexity seeks partnerships between parties to come together to make e-wallets work. It will be extremely challenging for any single service provider to effectively manage and execute an e-wallet. For example, a payment moves through several parties often with varying providers for each transaction. Consider the following example to understand how the money changes hands during an online transaction.

When a customer makes a purchase from an e-commerce site by submitting  their payment information that information is sent to the payment gateway. The gateway then encrypts the payment information and then sends it to a series of proved payment processors and networks for authorisation where the payment is either accepted or declined. The decision is conveyed to the customer, and all these activities take place in few seconds. The final step happens after the payment gateway sends the transaction to the payment processors and the money is transferred from customer’s account into the merchant’s account.

List of the Advantages of Electronic Wallets

  1. It offers more convenience for many consumers.

When you’re carrying an electronic wallet, you get to limit the number of cards you carry when you travel. You no longer have the requirement to carry a lot of cash with you either. All you need to do is tap your device to the payment receptacle, or have your mobile device scanned, to pay for the items you are purchasing. That means you’re no longer carrying a pocketful of items wherever you go.

  1. It provides access to other types of cards.

Electronic wallets typically store credit cards and debit cards. They can be used for a wide variety of cards, however, if the provider is compatible with the wallet you are using. That means you can store rewards cards, loyalty cards, and even coupons within your digital wallet, allowing you to enjoy more of a paperless lifestyle.

  1. It offers more security.

If you have a wad of cash in your pocket that gets lost, you have zero options available to you to recover your funds. Losing your credit cards means you must contact each lender to cancel each card, then have a new one issues. With an electronic wallet, the information is stored through a third-party provider. It’s locked behind your password or biometrics. Even if you lose your device, you’ll still have access to your e-wallet once you get a new device.

  1. It can be used at most retailers and online stores.

Electronic wallets have become widely accepted within the past few years. Most locations that accept cards as a payment option will allow you to pay with your electronic wallet. Although there are still some locations that are using older processing technologies, which does limit some product or service access, the number of retailers who provide payment access in this manner continues to increase each year.

  1. It requires users to authorize every transaction.

Electronic wallets function like a debit card when initiating a transaction. They require you to input your PIN to authorize payment. For devices with biometrics, a payment would require your fingerprint to authorize it. That gives you another layer of security against unauthorized purchases or the financial risks associated with identity theft.

  1. It may offer access to new rewards.

Many electronic wallets offer incentives to encourage consumers to use them instead of traditional payment methods. You may find discounts apply to certain purchases, such as fuel, food, or travel. Some businesses may work with your e-wallet provide to offer specific discounts as well. That means you have the potential to save money without changing your spending habits. You’re just changing how you pay for those items.

  1. It could help you with your budget.

Many electronic wallets can help you track your spending habits. Some may generate reports that show you specific categories of spending. You can also assign fixed budgets to specific cost categories to ensure that you’re not spending more than you should on certain items. If you have a big-ticket item to purchase, however, you can disable this feature to make sure there’s enough money available to make the payment.

List of the Disadvantages of Electronic Wallets

  1. It is not fully available worldwide.

The number of retailers which accept payments from an electronic wallet depends on the actual wallet you choose. In December 2016, just 36% of retailers accepted Apple Pay. 34% of retailers accepted PayPal as a form of payment. Just 25% of retailers accepted MasterPass. About 2 million retailers in North America currently provide access to some form of mobile payment through an electronic wallet.

  1. It still requires you to carry something.

Although an electronic wallet offers more convenience for many consumers, it doesn’t fully eliminate the requirement of carrying something with you. If you don’t have your mobile device on your person, then you have no way to complete a transaction. Because these wallets don’t store your identification and other needed items, you’re still forced to carry a traditional wallet or purse with you as well.

  1. It requires your device to have a charge.

There’s also the disadvantage that an electronic wallet requires you to have a charged device to have it operate. If you’re carrying a traditional wallet, you won’t need to worry about how much battery life is left on your phone.

  1. It doesn’t eliminate your security risks.

The security of your smartphone or mobile device is dependent on the settings you use. If you don’t have your device protected with some type of password, then someone could steal your device and potentially access the funds in your bank account or credit cards. There are definite security advantages to consider which make an e-wallet a beneficial technology, though it requires responsible management of it to maximize them.

  1. It may charge you more to process payments.

Many of the electronic wallets which offer a rewards program will charge you a fee to transfer those rewards. You may be required to process payments in a specific way to access these benefits as well. When using the PayPal debit program, for example, consumers receive 1% cash back when their transaction is a standard signature credit transaction. Using a PIN through a digital wallet eliminates this benefit because you’re changing how the point-of-sale treats the transaction. If you spend $900 per month, you’d be losing over $100 each year for the convenience of this payment method.

  1. It could encourage reckless spending.

When money is electronically-based instead of a physical item, some people struggle with their spending habits. The money doesn’t feel real, so proper budgeting doesn’t take place. If you are already struggling to maintain a budget with a traditional wallet, then an electronic wallet might make that issue even worse.

Popular Digital Wallets

PayTM:

Launched in 2010, PayTM is the largest digital wallet app in India. PayTM is one of the most used e-wallets in India with over 160 million people using PayTM across the nation. They’ve managed to raise around Rs. 2.2 Billion through funding by investors.

 

Why Should You Use PayTM?: 

Payments made through PayTMs digital wallets in India are accepted almost everywhere across the nation. As a customer PayTM offers you various services through its digital wallets system. You can also use their e-wallet to make payments to numerous online merchants. One of the best things about this digital wallet is that it allows you to do much more than carry out your e-commerce transactions. Similarly, through their digital wallets in India, you can transfer money, travel, shop, and carry out many more transactions through PayTM.

 

With payments via PayTM being accepted almost everywhere, it’s hard not to simply switch to it completely. PayTM has recently partnered with selective educational institutes across India to make it easier for the users to make cashless payments of fees as well.

 

 Google Pay:

Google Pay has quickly made a name for itself as one of the best digital wallets in India. Even though Google Pay has been a late entrant in the market of digital wallets in India, it has quickly managed to make an impact on the users’ thanks to their hassle-free services.

 

Currently, Google Pay has more than 25 million a month active users of the digital wallet in India.

 

Why Should You Use Google Pay?: 

Send and receive money instantly in your bank account using Google Pay UPI.  You can easily send money to your friends, recharge your phone, pay bills and much more through Google Pay. Google Pay is directly connected to your bank account and your registered phone number. This helps you save time that you would rather spend on reloading wallets and doing additional KYC which is generally required for other digital wallets in India.

 

You can easily use Google Pay and send or receive money directly from your bank account.

 

Amazon Pay:

 

The Global Giant i.e Amazon has developed its own digital wallet known as Amazon Pay. The digital wallet was launched in 2007 globally. However, Amazon Pay was launched in India a decade later i.e in 2017. More than 33 million people use Amazon Pays Digital wallet to make payments for various transactions.

 

Why Should You Use Amazon Pay?

Previously Amazon Pay was only used to make payments when you purchase something from Amazon. Now Amazon lets you make payments through Amazon Pay while transacting with selected merchants. Amazon Pay also offers various benefits like discounts and cashback.

 

Amazon Pay allows you to access data from the site of the merchant in a seamless manner. Therefore, helping you streamline your purchase process. Similarly, you can transact without entering information like credit card or debit card details, address, etc. While doing this you can be sure of security since Amazon has restrictions when it comes to data security, your data is safe and secured without losing integrity.

 

Some of the major attractions of using Amazon Pay’s digital wallets is their brilliant general usability, mobile support along with a rich feature set.

 

PhonePe

PhonePe is an all-in-one UPI-based digital payment app. It is one of the most popular digital wallets in India. PhonePe has been able to cross the 100 million download mark within just 4 years since it’s existence. The app is powered by Yes Bank and launched by Flipkart two giants in their respective industries. The app crossed the 100 million user mark in 2018 and is growing day by day.

 

Why Should You Use PhonePe?:

You can do everything through this app, from UPI payments to paying through the PhonePe e-wallet, from QR code payment to paying through your debit & credit cards. PhonePe is not just like any other digital wallets in India, it has many features in the app that make your lives easier. Get great deals and cashback on bill payments, food outlets, shopping, and much more through PhonePe. PhonePe assures data security against cyber-criminals. Along with this PhonePe is a multi-lingual app. The app is available in English, Hindi, Marathi, Tamil, Bengali, and more. Therefore making it easier for users to use the app seamlessly across the nation.

 

 Freecharge:

Freecharge, one of the most famous names right now when it comes to digital payment in India, has been known to target the youth in all their promotions. Kunal Shah and Sandeep Tandon founded Freecharge in 2010, to make it easier for people to transact through their digital wallets in India.

 

Why Should You Use Freecharge?:

With an equivalent amount of coupons given for every recharge you make, it’s a great option to save while paying your bills online. Along with that their “Chat-n-Pay” service helps users chat and pay their friends and merchants instantly. Freecharge offers exclusive deals and coupons to the customers who use Freecharges’ digital wallet.

 

The Freecharge digital wallet in India can be used to make both online as well as offline payments. Similarly, you can also use Freecharge to make payments at merchants like Hypercity, McDonald’s, Cinepolis, Shoppers Stop, HomeStop, Crosswords, and more.

 

BHIM:

This digital wallet is backed by The Reserve Bank of India (RBI) and launched by The National Payments Corporation of India. BHIM is probably one of the best digital wallets in India based on UPI. The BHIM digital was launched in India by Prime Minister Narendra Modi for all the android users. BHIM has played an important role in the quest to make India a cashless economy.

 

Why Should You Use BHIM?:

This digital wallet in India supports all the banks across the nation. Along with that BHIM lets you send and receive money using Virtual Payment Address (VPA) wherein you can transact without disclosing your bank details. Consequently, it also allows merchants to transact with customers by using fingerprint scanner which is obtained through the Aadhaar database.

 

BHIM enables QR code scan-and-pay option. Likewise, you can generate your own unique UPI PIN and QR code through the app. Also, you don’t need to worry about security issues as your login expires after 90 seconds of inactivity to minimize inappropriate and fraudulent use of your data.  Additionally, BHIM also provides you a transaction history to make sure that you keep a check on your transactions through the app.

 

ICICI Pockets:

ICICI is one of the leading Indian multinational banks. Currently, it is the largest private sector bank in India. ICICI Pockets is a digital-payment based app for mobile phones. The digital wallet in India service was started to make your lives easier by enabling you to make digital payments in an easy way. The app uses a virtual VISA card to enable users to transact on any website or mobile across the nation.

 

Why Should You Use ICICI Pockets?:

The ICICI Pockets e-wallet is not just limited to users of ICICI bank, you can fund your digital wallet through any bank account. The app’s digital wallet lets you transfer money, split expenses, book entertainment tickets, and do much more with one of the best digital wallets in India. And since this e-wallet uses virtual VISA, you can transact on any app or website in india.

 

The digital wallet app allows users to send money to any phone number, Facebook user, bank account number, and email ID. To make this process fun and social, ICICI Pockets uses your Facebook credentials to log in.While you might find a Pocket card useless, considering you’re opting for an e-wallet app to avoid using a card, they do have a pretty neat digital wallet app.

 

JioMoney

JioMoney, launched recently in 2016 by Jio is a digital payment app. The app is inspired by the concept of digital wallets in India. Similarly, the JioMoney app lets you get all the benefits of cash. Above all without any of its limitations.

 

Why Should You Use JioMoney?:

With JioMoney, one can receive great discounts and offers. Users can also bookmark their frequently visited retailers so shopping can be made quicker than usual. The best thing about Jio Money is that it can be used by people who do not have Jio as their telecom service provider. And if you own a Jio LYF mobile phone, you get exclusive access to the app that is preloaded with discounts and offers from selected merchants.

 

The JioMoney digital wallet in India also enables you to make secure digital payments from anywhere. Along with that, the app is very easy for everyone to use and quite simple to navigate.

 

Mobikwik

Mobikwik is a Gurgaon based e-wallet payment system in India that helps its users store their money. Their payment system of digital wallet in India was founded in 2009 by Bipin Singh and Upasana Taku. Mobikwiks large network connects more than 25 million users with approximately 50k merchants through their payment system of digital wallets in India.

 

Why Should You Use Mobikwik?:

Their e-wallet payment system enables you to recharge, pay bills, book travel tickets, and make third-party purchases through MobiKwiks digital wallet. Similarly, the digital wallet app allows you to buy digital gold, insurance, get a personal loan on MobiKwik, and you can also invest in mutual funds through one of the best digital wallets in India.

 

You can carry out transactions by adding money to your digital wallet through your debit card, credit card, net banking. Their service is not just limited until there, you can also opt for doorstep cash collection and use it to pay bills and shop through their digital wallets in India.

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