What is a Digital Wallet?
A digital wallet refers to software, an electronic or an online service that enables users to make transactions electronically. A digital wallet is also known as an e-wallet. It can store payment information of different users such as payment mode on different websites.
Although a digital wallet can be carried in different forms, the most popular is a mobile application, while the other forms can be a website or a desktop application. Digital wallet users have to download certain applications provided by banks or trusted third-party companies to avail of the services of a digital wallet.
Importance of Digital Wallets
In this era which is dominated by technology, one of the most groundbreaking technologies we have today is a digital wallet. A lot of users prefer these e-wallets to make their transactions over other payment modes. So why are digital wallets so important? Here’s the answer-
- Digital wallets eliminate the need for carrying a physical wallet to make transactions, purchases, pay bills, etc.
- Digital wallets allow the users to send money to their friends and family across the nation and the globe as well
- Digital wallets eliminate the need for using a bank account for making the transactions
- Digital wallets are helping many developing countries with their participation in the global finance market
What are the Types of Digital Wallet
There are three different types of digital wallets and they are as follows-
Closed Wallet: Any company that deals with products or services can create a wallet for its users. In this type of wallet, the users can only transact with the issuer of the wallet or other users of the same digital wallet. Ola Money, Amazon Pay are examples of closed wallets.
Semi-Closed Wallets: A semi-closed wallet allows users to make transactions at the listed merchants and stores by making both online and offline payments. Here, the merchants have to sign an onboarding agreement with the issuer of the wallet. Paytm Wallet is an example of a semi-closed wallet.
Open Wallets: Only banks or institutes partnered with another major bank can issue an open wallet. An open wallet can be used for everything that a semi-closed wallet is used for, along with an additional feature of being able to withdraw money from ATMs.
What Are Some Examples of Digital Wallets?
Paytm Wallet: Undoubtedly the most popular wallet among Indian users- Paytm Wallet is a semi-closed wallet with which you can transfer money to other Paytm Wallet users or make payments at selected merchants and locations. You can also use Paytm Wallet for online shopping at your favourite brands.
Paypal One-TouchTM: It is an extension of services offered by Paypal that enables users to make payments or transactions without the need of logging in or entering passwords.
Google Pay: Google Pay is a UPI enabled payment wallet that allows you to send or receive money directly from or to your bank account respectively. You can make transactions by any debit card or credit card that you have stored with Google Pay already.
Apple Pay: It is a wallet that is exclusively made for the users of iPhone, iPads and Apple Watches and can be used to make both online and in-store purchases.
A digital wallet is an electronic device or software that allows you to make transactions electronically or digitally. It is a faster way to send or receive money or make payments at online and offline stores as it eliminates the need to enter the receiver’s bank details. Digital wallets are one of the most preferred modes of payment nowadays due to their immense ease of use and wide range of applications.
- They eliminate the need for carrying the physical wallet to make payments
- They are very easy to use and offer a fast mode of transaction
- You can send money to anyone anywhere and at any time with the help of digital wallets
- Closed wallet
- Semi-closed wallet
- Open wallet