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What is e-Wallet and How Does it Work

The online payment has become widespread in many countries of the world and day after day, the demand for dealing with the e-wallet is increasing which refers to an electronic device or online service that allows an individual to make electronic transactions. This can include purchasing items online with a computer or using a smartphone to purchase something at a store. It also called “digital wallet”.

E-wallet has mainly two components, software and information. The software component stores personal information and provides security and encryption of the data. The information component is a database of details provided by the user which includes their name, shipping address, payment method, amount to be paid, credit or debit card details

Types of E-wallet

There are four types of e-wallets, we will discuss as follow:

Hardware wallet 

It is a physical electronic device that is designed to protect an individual’s cryptocurrency funds by securing their private keys. But even then, most hardware wallets require a PIN code for access, providing an added layer of protection.

Online wallet

It is a software or web service that allows users to store and control their online shopping information, such as logins, passwords, shipping address and credit card details.  It has been used by many people because they are cheap easy to use and can be accessed from the need to have is internet access.

Mobile wallet

It is a virtual wallet that stores payment card information on a mobile device. Mobile wallets are a convenient way for a user to make in-store payments and can be used at merchants listed with the mobile wallet service provider. It stores your loyalty cards, coupons, tickets, etc.

Paper wallet

It is an offline mechanism for storing Bitcoins. Images of physical Bitcoins are commonly seen in media coverage in innovative styles, mostly with a ‘new look’ of the coin and the private key printed either on paper, plastic, or metal.

You could know more about e-wallet from here.

How E-Wallets Work

Many digital wallet services work through apps on your smartphone. At the supermarket, for instance, you might simply tap your phone to a compatible check-out register to pay instantly. For others, all you need to use them is something you know, such as your mobile phone number and a PIN.

An online wallet may not have funds in it all the times or at all. It is the customer’s choice if he wants his funds intact or uses it for buying or just want one. A payment transaction between two banks takes place.

Advantages of E-wallets

There are many advantages of e-wallets we will discuss as follow:

  • A competitive differentiation for businesses.
  •  Instant payment and a higher conversion rate for customers.
  •  The mobile device has become more significant for users today.
  • Mobile wallet ensures the smooth transfer of payments from one party to another.
  • It provides a database marketing opportunity to marketers.
  • Mobile wallet ensures cost savings for the business by ensuring transparency in payments.
  • Since the business can reach out to a larger number of customers, the revenue would automatically rise.
  • Location-based services help businesses in doing customized promotions for their customers.
  • Mobile wallets also ensure the security of payment for customers.
  • Running loyalty programs with customers becomes easier with the help of mobile wallets.

Disadvantages of E-wallets

Also, there are many disadvantages to e-wallets:

  • Mobile wallets are not universal.
  • Internet Connectivity.
  • No mobile no wallet.
  •  Device failure.
  • Compatibility issue.

the pros and cons of e-wallet in details you could found here.