Not so long ago, people purchased goods and services in one of two ways: via cash or check. Some used the services of banks to keep their money safe while others simply chose to squirrel it away in various places throughout their homes. When the time came to buy goods or services, people usually had to have all of the money required for small and medium-sized purchases on hand, with credit being reserved mostly for big-ticket items like homes.
Then came the plastic credit card in the 1970s. It was not only the perfect replacement for paper money, but it also enabled consumers to spend more than they actually had in their bank accounts. For years, paying with plastic seemed to be the quintessential way to transact purchases, until the revolutionary technology came along that catapulted the industry onto an entirely new level. The e-wallet is one of this century’s most innovative and promising ways to buy. Linked to the ubiquitous smartphone, e-wallets look to be the next big thing.
Whereas the plastic cards of today involve a so-called “dipping” process that can take some time to complete, check-out is unbelievably seamless with e-wallets. Once the information is inputted, it’s simply a matter of tap and go. Using contactless technology known as near-field communication (NFC), a consumer can put their phone near a specially equipped reader and conduct a payment within seconds.
In addition, e-wallets can be used to carry multiple types of currencies. Whether you use Euros, dollars, yen, or dinar, they still provide the same smooth buying experience. Whether consumers want to tap out their transaction on a smartphone or click the mouse of a personal computer, the digital wallet is the 21st century’s intelligent update to the credit card.
The Rise of Mobile Wallets
In less than three years, the number of e-wallet users worldwide is expected to jump by a whopping 30 percent and total 2.1 billion. The skyrocketing rates are no coincidence. When behemoths such as Walmart and Starbucks build a bandwagon and start the engine, consumers are sure to jump on it in droves. Although others such as Samsung Pay, Android Pay, and Apple Pay are sure to join in on the party, heavy hitters such as PayPal and Alipay are projected to remain at the top of the tree, allowing merchants to accept payments from customers using both QR and NFC technology.
What Makes It So Accessible?
E-wallets are taking over the payment landscape because they reside on that most prevalent of all devices, the smartphone. By 2019, almost one-quarter of the world’s population will have ready access to a digital wallet. In addition to being widely used, smartphones are becoming cheaper while still containing the QR and contactless reading capabilities that mobile wallets require. Whether someone is in a remote village or in downtown Manhattan, the smartphone is serving as a uniting factor for all consumers.
Convenience of E-Wallets
The setup and login process is simple. To setup an e-wallet, a person only needs their account number, expiration date, and a password or fingerprint that acts as verification. Even when converting foreign currency, fees are low and the turn-around time is rapid.
Adoption of the e-wallet is steady, but it was initially slower due to consumer concerns about data breaches and other security issues. Fortunately, e-wallets have been embraced by the major smartphone producers, who now build the technology right into their hardware. Thanks to the strong encryption algorithms inherent in today’s e-wallets, a customer’s sensitive data is hidden from view, enabling payments to go through without the merchant or third parties having access to it. Because these solutions are constantly being upgraded as breaches occur, they remain highly impenetrable.
Alternative Credit Options
Now that an increasing number of consumers are making e-wallets an essential part of the way they buy products and services, savvy companies like PayPal have decided to capitalize by joining in on the credit card business. As a result, it is now possible to sign up for a PayPal credit card that can be used as a payment source.
Why would someone want to choose an e-wallet credit option over a traditional Mastercard, Discover, Visa, or American Express solution? For one thing, interest rates can be as low as zero percent with these upstarts, making them far more appealing than rates that are often in the double digits for the conventional credit card offerings. Furthermore, even higher-risk consumers are being allowed to start with low credit limits, which can be gradually increased over time as long as people can demonstrate a history of reliable payments.
The Growth of E-Wallets
With their appealing interest rates and consumer-friendly credit limits, e-wallets are quickly gaining approval from a large swath of buyers. In addition, an entire generation of millennials is now entering the prime buying time of their lives. Considering that an estimated 58 percent of this cohort are ready and willing to forego cash entirely in favor of e-wallets, this bodes well for the future of digital payment technology. The onus is now on smaller merchants to take the plunge and upgrade their point-of-sale technology and payment protocols to allow for digital transactions. Once they do, they are sure to see the benefits.