Digital wallets were designed to help people who worry about losing their cards and money, or who have many different cards and payment accounts to manage. They work just like a physical wallet, but instead they hold all of your card numbers and account numbers through a secure digital platform, which is locked with an encrypted password and can only be accessed by verified users. Digital wallets can be used to pay for goods and services online and offline, and they allow everything from bank transfers to credit card payments to be made from the same single application.
The development of digital wallets
At first, digital wallets were a physical item – a kind of personal organiser which contained card numbers and other saved data. However, these are prone to loss just like a real wallet, so the technology developed and the modern electronic wallet was created – a software platform containing payment details, ready to use whenever and wherever.
Today, the leading digital wallet service is still PayPal. The online payment merchant has since extended its services and it works with mobiles, tablets and other smart devices in order to allow instant payments, transfers and other financial transactions. There are also a number of leading apps for mobile which turn your phone into a digital wallet. These include:
- Apple Pay
- Android Pay
- Samsung Pay
- Google Wallet
When used on compatible devices, these apps can offer instant payment through any one of your cards or accounts. They hold the details securely using encrypted technology, and they prevent you needing to fill out long and irritating forms. All your details will be filled out automatically and the payment can go through immediately. Other popular digital wallet apps include the Capital One Wallet, eWallet, Gyft and LevelUp.
Many credit card providers offer digital wallet services, and these are often worth using if you hold a credit card with that provider. They can account for discounts, you can make interest payments and you can even apply for new credit limits or additional cards. This kind of service is a lot like online banking, while giving the added bonus of being able to make instant payments – both online and in person.
Safety and security: are digital wallets safe?
Encrypted technology is data which is scrambled before being stored, so that any hacking attempt results in unreadable information and the users stay protected. Digital wallets make use of this technology. All stored information like your name, contact details and account numbers will be held safely by the wallet provider, and it is their responsibility to protect you and your money at all times.
Like any form of digital payment technology, there is no guarantee of complete security. However, users of services like PayPal and Android Pay report high levels of satisfaction with the service, and there have been no major data breaches among digital wallet providers. Safety can be improved with a strong wallet password, through choosing a trusted third party provider and through retaining sole access to your own wallet details. Avoid writing down the password, for example!
Industry experts predict that by 2018, more than half of transactions online will use some form of digital wallet or payment merchant. PayPal itself has almost 200 million registered accounts worldwide. With mobile versions of the service giving the market leaders a run for their money, expect some serious competition in the e-wallet world over the coming twelve months!