In many circles, there has been a rising discussion surrounding digital currencies, cryptocurrencies and general blockchain technology. One of the buzz words tossed around more frequently has been “digital wallet.” Now, the digital wallet does not necessarily have to be only related to cryptocurrency, a digital wallet is simply a software base system that allows users to store payment information.
I think it’s safe to assume that the changing market environment is causing many people to give up physical forms of payment, i.e. cash or card, and moving to an even more electronic form of payment. Over the next few paragraphs, I want to discuss digital wallets in a little more detail. For the purposes of this article, I discuss from what they are, how they can be used, some pros and cons and a final wrap up of my personal opinion on the technology in general.
What Is It?
A digital wallet or e-wallet as it is sometimes called, can be a useful tool. We briefly touched on the definition above. It is a software-based system that securely stores users’ payment information and passwords for numerous payment methods and websites. Interestingly enough, they have been around for quite some time. PayPal and Venmo are considered digital wallets. You may also have heard of Apple Pay and Samsung Pay. An eWallet, however, is not only for making payments or transfers, you can store personal information in these as well. Identification cards, tickets, public transportation passes can be stored in this wallet as well.
Digital wallet applications are downloaded to a smart device and carry a high level of encryption. You will create a user name and password to keep the information safe. When you need to pay for products or scan an ID, simply log into your digital wallet and you have access to everything at once. You may be able to use your digital wallet at some ATMs to access cash. If you are interested in looking at a digital wallet just to store your cryptocurrency, here is one that I use.
Pros And Cons
There are multiple advantages and disadvantages to a digital wallet. I have broken down to three of each below.
Usability Of A Digital Wallet
This is definitely a positive for the digital wallet case. It offers a relatively easy buying experience. I’m sure you have seen either at the check out of a drive through when the person in front, hands over their phone to the cashier and they scan a barcode. It is a very easy and contactless delivery process.
In addition, many merchants offer a points system if you use the app as a payment vehicle. So you can earn free merchandise simply by using their portal. Opposed to using cash or your debit card where you may earn points, but typically not.
Additional Protection From Theft
There is no physical exchange with a digital wallet, it is all based on your application, so this is a much more secure way to pay for products or services. How many times have you lost or misplaced your wallet? There is no security on a physical wallet, even less if you have cash in the wallet. Notwithstanding, I’m sure that we have also misplaced our phone, but we can password protect our phone and have GPS locating technology. Now, I’m sure we have all heard of hackers and technology criminals, and this is still a risk. However, there are ways to enhance your security on your digital wallet as well. Nothing is 100 percent secure, unfortunately.
Changing Technology With Touchless Experience
In these times of continued pandemic fears or general airborne illness, many people prefer not to deal with cash or exchange physical cards. They do not know what has been in contact with the physical item. Digital wallets can alleviate that concern. If you are just using your phone and most people don’t hand out their phone, they know where it has been.
Resisting The Changing Technology
Our modern society was built on a cash system. Many people still only use cash or use cash only as a budgeting tool. It has only been recently where tapping your card versus swiping is accepted.
There is real feeling of loss when you take physical cash out of your wallet and pay for something. This is beneficial for some who cannot control spending. Also, physical cash on your person cannot be stolen unless you lose your wallet or get robbed.
Usability Of The Digital wallet
I know what you are thinking, “wait a minute, that was an advantage, not a disadvantage.” Well, we are both right. It’s a pro since it’s easy to use, but a con because you simply cannot use it everywhere. Card and cash are accepted pretty much everywhere as a means of exchange, however if you only have your smart device and the app, you may not be able to pay for everything that you want.
Cyberattacks
Many people have been victims of identity theft and bank fraud. These are all too real for some people. The concern of switching entirely to a digital wallet is scary. We mentioned above the resistance to change and that is a big part of this. Companies are working harder on better levels of encryption for financial transactions, but there are always risks associated. There are some wallets that may have better encryption than others. I would encourage learning about the different levels of encryption prior to purchasing. For the sake of this article, I will not go into different types of digital wallets. That is for another post.
Disclaimer: I receive affiliate compensation for some of the links in this post at NO cost to you. However, these are the best tools I have used and tested that I believe are most effective for launching and running an online business. You can read our full affiliate disclosure in our privacy policy. Also, I am not a licensed advisor, any information within this article is purely my opinion and not an endorsement of an investing strategy.
My Take On Digital wallets
Adapting to change can be hard. Technology is changing so rapidly that it sometimes seems to be impossible to keep up. When I first considered a digital wallet, it had more to do with keeping my cryptocurrency secure. Since cryptocurrency is completely digital, you need a digital wallet to house it. However, upon digging further, you can store everything in one spot. Sure there is concern over cyber-attacks, but physical forms of payment aren’t going away anytime soon. This gives an opportunity to better enhance security on digital payments and potentially alleviate concern.
Personally, I have a bit of a hybrid perspective on digital wallets. I use both physical and electronic payment methods. Not because I have any overarching concerns over electronic, but because society has not fully accepted digital payment. Out of necessity, I need to use both. The business world is changing at the speed of technology and in order to keep up, we must be up to date with technology in order to be competitive. I write articles like this to help everyone gain business and financial education. I hope you were able to get some good information from this article.
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