Wallet System and Its Big Bang Theory
Transactions have evolved over the years, and we are now in a period where it is possible to choose any of multiple options to make or receive payments. It may not be long before cash transactions are reduced to a tiny percentage compared to other forms of transactions including digital and card-based transactions.
Leading the charge to the digital transformation era are e-wallets that have ushered in greater convenience while securing transactions at the same time. Let’s dive deep into the world of e-wallets and understand why it will emerge as one of the critical transactional platforms of the future.
E-wallets explained in a nutshell.
The concept is quite simple, despite being a highly secure mode of transaction. A user downloads an app on to a smartphone and installs the e-wallet app. Following the installation, the user transfers funds to the e-wallet through one of four different options. Funds can be transferred from a bank account, either through net banking or by transferring directly from a debit card, funds can be credited from a credit card, and cash can also deposit funds at select deposit locations. The funds that are transferred into the e-wallet can then be used for making purchases or for transferring funds. E-wallets are similar to debit cards, with elevated levels of convenience and flexibility for making purchases of low transaction value.
Dispensing with the need for transaction fee and minimum purchase value
While debit cards can be assumed to be the forerunners of e-wallets, they came with the burden of a transaction fee and minimum transaction value. This made it inconvenient for merchants, who sometimes passed on the burden of the transaction fee to customers without their knowledge, by inflating costs of products and services. E-wallets do not come with limitations of purchase value, or demands for a transaction fee. This comes as an advantage to users who find it extremely convenient to make payments and pay utility bills.
Advanced technology in e-wallets
Typically there are two types of technology that are used in digital wallets. One is the technically advanced NFC (near field communication) concept, and others are the app based technologies. The technological superior NFC concept offers by far the most convenient mode of payment in digital wallets. In the future NFC will play a more significant role in workplaces and shopping establishments. It will not be long before all phones come with NFC chips. This concept permits users to make a payment or conclude a transaction in the shortest possible time without the need for entering numbers or punching in codes. All that is required is a pure wave of the phone across the POS for the transaction to be concluded.
Digital wallets and ride hailing apps
The speed of the technology helps payments to be settled in less than a second, thereby helping ride operators to move onto the next taxi booking app, while clients can get on with their itinerary without having to spend additional time settling payments. Digital wallets offer the best option for pre-empting disputes, because of immutability of the transaction records. This is precisely the reason why YelowTaxi, one of the more popular services has migrated to digital payments interface. All ride hailing apps have embraced e-wallets as payment options, because of the highly secure and convenient options that come with the arrangement.
NFC concepts involve the use of compatible devices for transactions. This is one of the reasons why other app-based technologies are more popular and widespread. App-based transactions involve the keying in of the recipient or beneficiary phone number, followed by entering the amount that needs to be paid or transferred. Another mode of payment includes a QR code based transfer. This is a two-dimensional barcode which can be scanned by the camera of a smartphone. This scanning is an authentication process to transfer the funds into the account linked to the QR code. After the QR code has been scanned the individual initiating the transaction needs to enter in the amount and conclude the transaction. Moreover, the more popular method of transaction is the transfer from one mobile linked e-wallet to another e-wallet. Here the merchant typically seeks the mobile number of the customer, after which an OTP is transmitted to the mobile number of the customer who will then need to share that number with the merchant for the conclusion of the transaction.
Limitations of a few e-wallets
Some of the more convenient and flexible e-wallets permit the transfer of funds from a bank account to the digital wallet and vice versa. Whereas, some of the more inflexible e-wallets do not permit users to transfer the amount back to the banks. This inability to transfer funds back to the bank can be a severe handicap for users who will have no other option other than having to use the funds fully through the e-wallet. Users will find it a lot more convenient and feel reassured when they are permitted to transfer funds back to their bank accounts when there is a need for cash transactions. Residents of many nations still rely on cash transactions for specific purposes. Hence it would be a good idea to offer greater flexibility.
Transactions without the need for internet connectivity
Some of the transactions through e-wallets can be concluded without the need for internet connectivity. This is a significant advantage for users and merchants in remote locations that may have erratic network coverage. All that is required in such situations is text message over mobile networks to authenticate and conclude the transaction. Not only is this option a convenient and straightforward method, but it also comes with the assurance of a fast transaction. The transaction will conclude at the speed with which the text message reaches the mobile.
Digital wallets – the face of future transactions
As nations grapple with sophisticated counterfeiting techniques of currency notes, and the risk that merchants face in carrying large amounts of cash at the end of the day, digital wallets offer a ray of hope. In combination with credit cards and debit cards, e-wallets will transform the way transactions are concluded globally. With greater efforts on the part of governments to bring in more transparency by monitoring and tracking transactions, the focus will be on digital transactions. It is not without reason that e-wallets are witnessing widespread acceptance – they offer greater security, improved convenience and help regulatory bodies to maintain oversight of transactions.
Author – Bio
Shahid Mansuri Co-founded Peerbits & Yelowsoft, one of the leading mobile application development company USA, in 2011. His visionary leadership and flamboyant management style have yield fruitful results for the company. He believes in sharing his strong knowledge base on “how to build a mobile app” with leaned concentration.