In today’s digital world, E-wallets are quickly gaining prominence and becoming customers’ preferred method of payment. That’s because they are cutting-edge, secure and easy to use. Incorporating E-wallets into your business model may well be one of the best things you could do to enhance your company and make your customers happy.
Advantages of E-Wallets
It’s no wonder that these digital payment devices are taking the retail world by storm. They offer a wide variety of attractive qualities for customers and merchants alike.
- Security. For one thing, cash is notoriously easy to lose not only due to carelessness but also from theft. By contrast, the data and funds stored in an E-wallet are encrypted. Even if a person’s cellphone is stolen, the information remains safe. During payment transactions, no personal information is leaked to the merchant or to potentially unscrupulous staff members, drastically lowering the chances of theft and fraud.
- Acceptable from a smartphone. These days, most people rarely go anywhere without their cellphones. That makes having an E-wallet particularly convenient and allows people to buy items on impulse even when they don’t have any actual cash on hand.
- Convenience. Many people are recognizing the freedom that comes with having an E-wallet. Gone are the days of cumbersome, heavy wallets stuffed with a disorganized mess of coins, bills and cards. Today’s digital payment mechanisms allow all information to be securely and neatly stored on a device that people are already carrying as a matter of course.
- Streamlining of the purchase process. Today, buying something digitally can be as fast as positioning one’s phone near the merchant’s card reader, placing a finger on the phone for verification, grabbing the product and walking out of the store. Gone are the days of fumbling for exact change, writing checks or even waiting seemingly forever for a credit card to be verified.
- E-wallets are simple to manage. Transferring funds into a digital wallet can be accomplished virtually anywhere. Whether a customer is at home on their PC, at work with their laptop or on the go with just their mobile phone, it’s a breeze to keep track of and modify information.
- Flexibility with currency. Especially for merchants who do business internationally, digital transactions can make everyday commerce much easier. That’s because merchants who accept payments from E-wallets can choose a wide variety of currencies that they can accept.
How Do E-Wallets Work?
- The initial setup of an E-wallet requires a leap of faith for customers. They must trust that their information will remain secure not only on their smartphone but also in the archives of the E-wallet provider. In order to get started with the technology, customers must input their bank account and credit card information since these are the places from which their funds will be drawn when the time comes to make a payment.
- The E-wallet does not necessarily contain any funds. It is up to the customer to decide when or if they wish to place monies there.
- A payment transaction can be described as an encrypted conversation that takes place between two banks: the customer’s and the retailer’s. E-wallet payments are beneficial to buyers and sellers alike because of their heightened security protocols and the fact that a customer’s credit card information never becomes known to a merchant in the same way it once did when people used magnetic stripe cards.
- The transaction proceeds quickly and securely, with the funds drawn from the customer’s E-wallet or bank balance and sent within seconds to the merchant.
- Once the process is complete, both parties receive what they expect; the customer gets a product or service, and the merchant is paid appropriately for what has been purchased.
- Thorough records are kept by the seller’s merchant services provider as well as the sponsor of the customer’s e-wallet, enabling everyone to have accountability should any questions or disputes arise.
In general, an E-wallet is a prepaid account that is used to store money and make online and mobile payment transactions quickly and securely. Before it can be activated, the user must input all of their account information, which is then stored and used when the time comes to make payments. When utilized with a smartphone, an E-wallet can also be the repository for transit and airline tickets, gift cards and customer loyalty rewards. Ultimately, the E-wallet benefits customers by giving them a fast and secure way to pay as well as a convenient place to keep all manner of valuable information. When merchants accept funds from E-wallets, they are more protected against fraud and can process payments seamlessly.
There are three types of E-wallets:
- Open wallets. This type of E-wallet can only be issued by banks or their partner institutions. It can be used to transfer funds from one account to another and to withdraw cash from ATMs. In fact, open wallets work much like credit and debit cards.
- Closed wallets. As the name implies, this type of payment instrument is restricted. It is provided by a specific company such as Amazon, and it can only be used to make purchases to the entity that sponsors it. At any time, the user can transfer any remaining balance in this type of wallet back to their own bank account.
- Semi-closed wallets. As is the case with their closed counterparts, these are sponsored by a particular company. Customers can purchase from several vendors and can also transfer funds to other users in the same network. However, they cannot withdraw cash and place it into their own accounts.
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