What is a Digital Wallet and how Does it Work?

As the world is shifting from cash to electronic transactions amid the pandemic, digital wallet solutions are increasingly gaining ground against other payment methods.

And it's no surprise.

In addition to offering contactless payments, digital wallets feature multiple benefits for consumers, which we will explore in this article, along with the basics about digital wallets.

What Is a Digital Wallet and How Does it Work?

A digital wallet or an e-wallet is a prepaid financial solution that allows users to manage their finances under one platform.

For that reason, customers have to deposit funds into their account to get started with digital wallet solutions.

Upon topping up their account via one of the service provider's payment methods, clients can use the e-wallet to hold money, transfer funds to other users, or pay for products at merchants.

Once the funds are in a user's account, digital wallet services utilize their own internal networks for on-platform transfers and payments. As a result, e-wallets feature inexpensive and (near-)instant internal transactions.

Also, consumers can withdraw their funds from their accounts at any time.

Consumers can access digital wallet solutions usually via a web platform (or desktop application) and a smartphone app.

It's important to mention that digital wallet users can save their financial and personal details in the app, allowing them to autofill forms during checkout.

Furthermore, e-wallet smartphone apps use either Near Field Communication (NFC) technology or QR code scanning features to allow convenient and contactless physical, in-store payments in addition to online transactions.

What Is a Digital Wallet Used For?

Digital wallets have multiple use-cases for consumers. Examples of such include:

• Ecommerce shopping
• Cross-border transactions
• Paying for online products and services
• Contactless in-store payments at physical stores
• Topping up customer accounts on a (both local and foreign) business' online platform
• Transfers to friends and family
• Receiving a salary from the employer

Are Digital Wallets Secure?

Since they store the clients' personal and financial details within the app, it's rightful to ask whether digital wallets are secure.

In short: yes, they are.

Fortunately, most e-wallet solutions feature enhanced security features to ensure the safety of their users.

As an important feature, digital wallets use state-of-the-art encryption technology to keep sensitive customer data safe. Furthermore, for each transaction, e-wallets generate a random number sequence.

Also, a digital wallet service like STICPAY requires users to use a PIN or biometrics (fingerprints, facial recognition) to unlock their account.

Besides storing client funds in segregated accounts with uninterrupted access, STICPAY monitors both end-users and merchants with rigorous Know Your Customer (KYC) and Anti-Money Laundering (AML) checks to eliminate fraud.

What Are the Benefits of Digital Wallets?

Digital wallets offer a multitude of benefits to consumers, including:

• Increased convenience: Instead of manually providing their details to merchants, digital wallet customers have to simply click or tap one button to autofill forms during the checkout process. In-store e-wallet payments are also more convenient as consumers don't have to carry their wallets to settle their transactions. Also, it’s easier to send cross-border transactions with digital wallets than through banks.
• Enhanced security: Digital wallets feature enhanced security and anti-fraud measures to protect customer funds.
• Cost-efficient fees: Since digital wallet payments take place in the service provider's internal network, there are no middlemen involved in the transaction, which decreases the cost of the transfers. For example, STICPAY features an inexpensive 1% fee for member-to-member internal transactions.
• Rapid transfers: Internal transfers are not only cheap but also fast. And some digital wallet solutions feature instant on-platform payments between clients.
• Multiple payment methods: E-wallets incorporate numerous payment methods for depositing and withdrawing funds to suit individual user preferences. At STICPAY, users can choose from the following payment options: Visa, MasterCard, UnionPay China, bank transfers, and cryptocurrency (Bitcoin, Litecoin, Ethereum). Besides these, STICPAY allows customers in seven Asian nations (Indonesia, Malaysia, China, South Korea, Japan, the Philippines, Singapore) to access rapid and cheap transactions via the company's local bank wire service.
• Multi-currency accounts: Financial providers often charge hefty fees for transactions that require a currency conversion. To avoid that, some digital wallet solutions allow users to create multi-currency accounts.

Create a Digital Wallet at STICPAY

As part of the digital transformation, consumers increasingly realize the benefits of digital wallet services.

They are convenient and feature advanced security features while allowing speedy and cost-efficient transfers between customers and merchants alike.

For that reason, we recommend taking a look at STICPAY, a global digital wallet service that offers a convenient financial experience to consumers all over the world.

As part of a global service covering over 190 countries, STICPAY offers a multitude of benefits to digital wallet customers, including:

• Enhanced security and anti-fraud features with strict KYC and AML screening
• Instant and inexpensive member-to-member payments at a 1% fee
• Multi-currency accounts in 29 national currencies
• Easy and secure in-store and online checkout process
• Multiple payment methods for deposits and withdrawals, including Visa, MasterCard, UnionPay China, cryptocurrency (Bitcoin, Litecoin, Ethereum), and bank transfers
• Besides international transactions, STICPAY offers cost-efficient and rapid local bank wire transfers in seven Asian nations (Indonesia, Philippines, Malaysia, Singapore, China, South Korea, Japan)
• Convenient access via a web platform and redesigned iOS and Android mobile apps
• Support for 19 languages
• Wide selection of hand-picked and verified merchant partners
• 24-hour customer service

Are you ready to get started?

Create an account at STICPAY now!

Have you liked us on Facebook yet? Are you following us on Twitter and Instagram? Join STICPAY on LinkedIn!