What is a digital wallet? If you are new to the digital space and require making regular payments online or simply targeting to upgrade, one of the main requirements is a digital wallet. Latest studies indicate that the COVID-19 pandemic has pushed the demand for digital payments high as more people now embrace cashless systems for making payments. You need a digital wallet to complete online payments, but they can help you do a lot more.
This guide gives comprehensive information about digital wallets to determine what they are and how they work. We will also compare digital wallets to crypto wallets and highlight the best options for you. Do not just pick any digital wallet; go for the best.
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What is a Digital Wallet?
A digital wallet is exactly what it sounds like; the digital version of your personal financial account, which is accessible via a smartphone, computer, or other intelligent device. Having a digital wallet eliminates the need to carry a bundle of cash or stacks of cards all the time. With just your smartphone, you can access your bank account via a digital wallet, pay for services, check balances, and a lot more. Today, the most popular digital wallets are Google Pay, Apple Pay, and Samsung Pay. So, how exactly do digital wallets work?
Digital wallets use application software that links your payment particulars to your bank account, and the vendor you are buying from to process payments. You need to start by determining the type of operating system in your device to get started. For example, an iPhone user will probably go for Apple Pay, while a Samsung user will gravitate to Samsung Pay or Google Pay.
In other cases, you might want to use several wallets. For example, you might find a person using Apple Pay, PayPal, and Venmo. To make payments using a digital wallet, you only need to open the app on your end, be it your smartphone or computer, to access the user interface. Then, navigate to the payment section, where the app will ask you to key in the details of the vendor. Once you are through, the wallet will deduct the money from your account and credit it to the vendor. A message will also be automatically generated to show the transaction has been successful or failed.
When you authorize the digital wallet to make payment, you might also be able to complete the transaction by holding the smartphone on a card reader for the personal details to be transmitted. This is only possible where the retailer supports contactless payment systems.
What is the Difference Between Digital Wallets and Crypto Wallets?
Before looking at the leading digital wallets on the market today, you might be wondering, “are they different from the crypto wallets?” Although they are both wallets, indicating that they hold the funds you can use to make payments, their operations are fundamentally different.
A digital wallet is an electronic version of a wallet that you would carry around. If you want to buy an item worth US$400, you can hold the amount in a pocket wallet and make cash payments. Now, a digital wallet allows this cash to remain in your bank account, but you can access and make the same payment of $400 through an app. The wallet links the vendor with your bank and transfers the money so that the process is fast and seamless. See: you are accessing the same cash and making a payment with it but in different ways.
Unlike a digital wallet, a crypto wallet does not store fiat currencies. Instead, it only holds crypto coins, such as Bitcoin (BTC) and Ethereum (ETH), for the respective blockchain network. Indeed, it does not actually store coins in reality because cryptocurrencies are virtual money. Instead, crypto wallets store a string of codes that signify the crypto coins that you hold in a blockchain network. Note that you and the recipient must be on the same blockchain network to make payments with crypto wallets. You only need to have the right public keys of the recipient and your crypto wallet’s private keys.
If you want to use the crypto wallet to pay in a different crypto or fiat currency, the coins you have should first be converted to the targeted coin or fiat money. Visit hi.com to learn how you can make the conversion and use cryptocurrencies. For example, you might want to start staking your coins or crypto lending.
Both digital wallets and crypto wallets are considered more secure than carrying cash or credit cards. When you use a crypto wallet to hold your coins, you can enjoy an impressive return on investment if the value grows.
Top Seven Digital Wallets
Today, there are dozens of digital wallets that you can use to make payments. So, let’s look at the best options:
1. Google Pay
Google Pay is one of the most common digital wallets today. Users like it because it is fast, reliable, and secure. The good thing is that it is built into most Android devices and is pretty easy to use. The wallet uses NFC technology, where you only need to tap the app to complete payment on an NFC-enabled terminal. A lot of stores today support Google Pay.
2. Cash Up
This digital wallet was created in 2014 and is used for contactless payments on iPads and iPhones. The application stores your credit card and debit card information and processes it when making payments. However, it converts the data into tokens that are only accessible using your fingerprints. Today, it is considered one of the most secure digital wallets.
To extend its use, Cash Up also has another app, referred to as Wallet. This app stores everything, such as movie tickets, boarding passes, and coupons.
3. Samsung Pay
This digital wallet was launched in 2015 and stands out from competitors in that it uses both MST and NMFC technologies. It implies that you can use it for both contactless payments and traditional magnetic stripe terminals methods. In addition to storing your debit and credit card information, just like Google Pay, Samsung Pay is also enabled to store more information, such as reward cards, memberships, and gift cards. Samsung has also added its own reward system for clients who use Samsung Pay for purchases.
PayPal is one of the oldest and most widely adopted digital wallets globally. It is considered an excellent way of securely making payment for online purchases. Unlike other wallets that are structured to fit a specific type of operating system – iOS or Android – PayPal works on both.
PayPal intensified its operations after reaching an agreement with MasterCard and First Data, which enlarges their reach and allows clients to have more options of paying with PayPal. The wallet is particularly fast, and its focus on security is impressive.
Venmo is another digital wallet owned by PayPal and has become one of the most preferred peer-to-peer payment applications. The app is very easy to use, and all that you need to do is link your credit card, checking account, or debit card and start paying your friends. The app also allows you to receive payments.
The wallet uses advanced data encryption to protect users’ financial information and further allows you to share financial details or transactions with a message on Twitter or Facebook. It is also very cheap, with bank transfers and debit transfers running free, while credit card transfers attract a fee of 2.9%.
6. FreshBooks Payment
FreshBooks Payment lets clients pay with invoices. Then, it records the payments automatically in your FreshBooks account. The process of payment is simple, safe, and transparent, allowing you always to know the money you make. Indeed, you can even accept credit card payments with a single click. The most enjoyable part about FreshBooks Payment is that you can even try it for free to decide whether to buy or not.
Many digital wallets out there are now offering some types of business plan, especially for clients who want to use them for business. Due is one such digital wallet that is designed for entrepreneurs. It was created in 2015 to simplify billing, timekeeping, and processing payments.
Services designated for individuals are offered free, but those for businesses attract a commission. However, the rate is fixed at 2.8%, meaning that you can easily predict the cost of every transaction.
How to Select the Best Digital Payment for Your Facility
Now that we have looked at the leading digital wallets, how do you narrow down to the best option for your facility? We must indicate that there is no one-fits-all option. Instead, you need to check for the one that matches well with your needs. So, here are some useful tips to help you pick the best:
1. Ease of Use
When you decide to use a digital wallet, perhaps on a public transport or e-commerce store, it should be easy to use. You should be able to complete the transaction fast and generate an instant confirmation. For example, you should be able to simply tap the app on your phone, key in the details, and get the payment cleared in no time. You might want to look at how different digital wallets work to pinpoint the one with a better user interface and easy-to-use.
2. Highly Secure
There is nothing as distressing as waking up one morning and finding that hackers have siphoned your funds on a digital wallet; this has been a major issue with credit cards and one of the reasons why more people are opting for digital wallets. However, it does not mean that digital wallets are 100% secure. Therefore, you should go for the models that offer high levels of security to reduce the risk of identity theft and loss of your funds. Some good features that indicate a secure digital wallet include two-factor authentication, advanced encryption, and regular updates.
3. Customer Support
Behind every digital wallet is a company that supports it. Therefore, you will want to identify a company with professional support to ensure that any issue that may arise when using the wallet is sorted fast. For example, if a technical issue that makes it impossible to complete a payment in a selected store happens, the support should be there to resolve it immediately. An excellent digital wallet firm should have multiple client support channels, including phone numbers for direct calls, live chats, email support, and a knowledge base.
4. Reviews From Past Clients
One way of determining if a digital wallet is good is by reading through reviews from past clients. After using different wallets, clients can tell you whether they are good or not. For example, if you find many clients complaining that the support or security of a selected wallet is poor, it will be a good idea to avoid it. You might want to extend the assessment to expert reviews. These professionals can help you learn more about digital wallets, especially the mechanics and hidden features. Reviews often serve as an eye-opener, including to avoid wallets that might look good but are designed poorly.
While convenient, you need to appreciate that digital wallets are not free to use. Therefore, you need to think about the costs of using them. For example, how much does Google Pay cost to make a transaction compared to PayPal? Remember that the idea is not to jump to the cheapest digital wallet , instead, you need to target the one with high-quality services and affordable rates.
In this post, we have answered the biggest question, “what is a digital wallet?” Unlike using cash or credit cards, which can be pretty risky, a digital wallet can offer a safer and more convenient payment method. They are easy to execute and are supported by a wide range of vendors and online sellers. Remember that it is always a good idea to have more than one wallet so that you can interchange them when there is a glitch on one. A crypto wallet will also be an excellent addition for those interested in cryptocurrencies. To be sure of getting it right on digital wallets, visit hi.com.