eWallets are growing more and more widespread, whether it's for gambling or online shopping. eWallets can be great way to be keep your money safe and secure.
What is an e-Wallet?
An electronic wallet (e-wallet) is a software that securely stores users' payment information for various payment methods and websites.
These e-wallets allow users to make physical and online payments almost instantaneously, through near-field communications technology. Digital wallets can also be used in conjunction with mobile phones, with options like Apple Pay and Google Pay leading the way. Some types of digital wallets can store loyalty card information and even coupons used for digital payments.
e-Wallets consistently provide a great ease of use and make payment processes immeasurably smoother and safer with fast transaction times that are securely tracked and stored as digital data. For example, as an iPhone user, one can remove the need for a physical wallet by simply entering and verifying card details into Apple Pay's mobile app, which is supported by almost all stores both online and in-person.
Digital wallet systems give companies the opportunity to collect far more personal spending data, which is used to better target the individual with unique marketing based on their particular spending habits.
e-Wallets have grown exponentially in popularity with the boom of cryptocurrencies. All cryptocurrencies are digital and therefore ownership can only be stored electronically. There are thousands of various cryptocurrency wallets, with some being so specific that it can only hold a single currency. The most popular crypto e-wallet is likely Coinbase.
e-Wallets offer financial services in the form of a digital payment gateway by storing all necessary payment information from a variety of sources, from debit and credit cards to coupons and loyalty cards.
e-Wallets can also be used to store and transfer funds and is very popular among the cryptocurrency community, as all cryptocurrency value is necessarily digital.
e-Wallets replace the need for a physical wallet.
Different Types of e-Wallet
e-Wallets take on various forms - they can be a part of a bank's mobile app, they can be directly integrated into your mobile phone software or part of an online payment platform, such as PayPal.
Some of the most popular digital wallets are:
- Apple Pay - Apple Pay is a mobile payment system that is exclusively supported on Apple technology, such as iPhones and Apple watches. Apple pay allows users to make secure contactless payments in shops and online. Unlike contactless card payments that limit you to a £45 spend, there is no limit for Apple Pay. There are countless locations that accept Apple Pay but always check before purchasing.
- Samsung Pay - Samsung Pay is another form of mobile wallet and can only be used by customers with Samsung Galaxy devices or Samsung smart watches. Users can add both debit and cards to their Samsung pay e-Wallet and can use it for physical or online transactions.
- PayPal - With the PayPal electronic wallet, customers can pay for goods and services online, send and receive money, and even buy and sell items on eBay. Paypal have two options for in-store payments with the NFC PayPal app or the PayPal Mastercard. Overall, Paypal is a great choice for online and offline payments.
- Amazon Pay - Amazon pay is an exclusive e-Wallet for Amazon customers that uses pre-existing customer payment information to create a smooth checkout process. Amazon members can even use Alexa devices to pay for products with their Amazon Pay accounts.
- Visa Checkout - Visa Checkout is perfect for those that primarily use Visa debit and credit cards. Visa Checkout simply requires users to enter and verify card details which can then be used to make online payments. This e-Wallet also benefits from additional security protection, as all payments exclusively go through Visa's own transaction gateway instead of being verified by each retailer's website.
- Google Pay - Google Pay, like most other types of e-wallet, simply requires users to enter their payment information to use the service. After details are added, customers can use Google Pay in stores, online, in apps or to transfer funds (US/India only). Google Pay is also available on Google mobile devices but can also be used on their Chrome browser software.
- Cryptocurrency Wallets - All cryptocurrencies must be held on e-wallets as they are inherently digital assets. There are many different wallets to choose from in the crypto space - please take a look at the following section for the key information regarding crypto digital wallets.
Advantages of e-Wallets:
- Security - Unlike regular wallets, digital wallets cannot be lost or stolen. The data within the wallet is encrypted and therefore far more secure. Even when making a payment, your account details are not transmitted during a transaction. Instead a token is generated which provides a reference to the necessary details, but never actually shares them with the merchant. Once the payment is complete, the token no longer has any value.
- Ease of Use - Digital wallets are far easier to manage, eliminating the need to physically carry cash and cards. They also offer many ways to purchase and some even allow users to withdraw cash from ATM machines. e-Wallets can store much more than card details. including virtual IDs, vouchers, gift cards, cryptocurrencies, concert tickets, boarding passes and much more, all within the app.
- Budgeting - Digital wallets require passwords or biometric scans (FaceID and Fingerprint confirmations) for every single transaction, allowing for much easier recognition of money being spent. e-Wallets store all transaction history, meaning users can access past payments and current balances in an instant. Some even have built-in budgeting software.
Where can you store your cryptocurrency?Cryptocurrency digital wallets can be broken down into two types, custodial and non-custodial.
Custodial WalletsIf you have purchased cryptocurrency from a large exchange such as Coinbase then chances are you will have used a custodial wallet. a custodial wallet works in much the same way as a conventional bank, you give them your funds and they store them for you, owning and operating the accounts that they are stored in, when you are ready to withdraw your currency then you give them a new address to transfer the coins to and they enact the transaction, usually taking a small fee for their services.
Custodial wallets are normally used on the larger exchanges to make it easier for new customers to buy and sell cryptocurrency without having to set up their own storage solution.
A non-custodial wallet is a wallet where the owner of the cryptocurrency holds the private key and ownership of the wallet. The key, sometimes referred to as a seed phrase, is a series of words, anywhere between 12 and 24, that acts as a restore for the wallet if it is lost.