Electronic Wallets Advantages and Disadvantages – Pros and Cons of Mobile Wallets
Electronic wallets have advantages and disadvantages for shoppers who are using their smartphones to pay in person and online. The primary advantage of a mobile wallet is that it is a more secure form of payment. However, security is the primary concern that keeps consumers from using electronic wallets. Although most newer phones come with electronic preinstalled by the device manufacturer, most are not using them for payments on a regular basis.
Apple Pay, Google Pay, Samsung Pay are all popular electronic wallets. They are apps used by shoppers to pay in person and online. US consumer lad behind other countries in the adoption of mobile payments. The most common reason cited is security concerns.
With an electronic wallet, you can pay quickly and securely by simply holding your phone over the payment terminal and verifying the purchase.
What Is Meant by Digital Wallet?
An electronic wallet, also called a digital wallet, mobile wallet, or e-wallet, is an app installed on a smartphone that securely stores payment information like credit cards, debit cards, PayPal, or other. The electronic wallet is used to pay for purchases in stores and online. Some electronic wallets can be used to store loyalty cards, transportation tickets, and event tickets.
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What Is Wallet Payment Method?
Wallet Payment Method is an electronic wallet payment app that securely stores shoppers’ payment information. The electronic payment wallet is used at the checkout register by waving it over a contactless reader. Your phone transmits the payment card numbers to the retailer securely.
Are Mobile Wallets Safe to Use?
Mobile wallets are safe to use. They use encryption and near field communication (NFC) to protect payment information from being stolen by hackers. They are safer to use for shopping than swiping physical debit or credit cards in a point-of-sale (POS) terminal. With electronic wallets, the payment card numbers and each transaction are encrypted. When the wallet app transmits the payment information at the checkout register, it doesn’t contain the full account number.
Electronic Wallets Advantages
Electronic Wallets Reduce Fraud
The data stored in mobile wallets is encrypted which protects your actual payment card account numbers. Mobile wallets use random payment codes rather than sending the actual card numbers to the merchant. The payment codes cannot be used more than once. Electronic wallets use biometrics to protect the wallet app and require them to authorize a transaction. Once stored in the app, the full card numbers are not displayed, so the card numbers cannot seen by someone nearby or stolen by hackers.
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Electronic Wallet are Faster Than Paying with Credit Cards
Using a digital wallet facilitates and accelerates checkout process in stores and online. Electronic wallets save time when paying in person at the checkout register because the transaction happens more quickly than waiting for a physical card authorization. When you use an electronic wallet you only need to open your phone and wave it at the POS terminal that saves time fumbling for a card in your wallet and waiting for the cashier to hand it back.
Electronic wallets can also save time when paying for purchases on line if you have your web browser synced with the mobile wallet app then you can simply use one of the stored payment methods to pay from an authorized web browser . Often the web browser will ask you to verify The CVV security code for a credit card or pin number for a debit card.
Electronic Wallets Can Be Used to Shop Securely
Electronic wallets can be used to shop securely in stores and online when you use a mobile wallet app. The retailer does not receive your full credit card information when you pay with an e-wallet app. Electronic wallet can prevent your payment cards from being stolen buy card skimmers or in data breaches. For example, in a recent major data breach, all 850 Wawa convenience stores were hacked when malware infected IT system that handled payments. Hackers stole payment card numbers from every POS terminal including fuel pumps. Electronic wallets encrypt payment card information and do not send the full numbers to the retailer, shielding shoppers form this type of cyberattack.
Reduces the Number of Places Where Your Card Numbers Are Stored
If you shop online using an electronic wallet reduces the number of websites where your payment information is stored. Maybe you have noticed that ecommerce websites usually offer to store your payment information for future purchases. This is a security risk because if that retailer is ever hacked your payment information could be stolen. Using a mobile wallet to check out online means that the retailer never had your full payment card numbers in the first place. With an electronic wallet, your card numbers are not stored in an online account and the retailer never actually have access to them either.
Electronic Wallets Store More than Payment Information
Some electronic wallets store more than just payment information. The more widely used wallets like Apple Pay, Google Pay, and Samsung Pay also store transportation tickets, event tickets, and store loyalty cards. So there’s no chance of leaving your ticket or shoppers club card at home. You won’t need to have a bunch of key tags hanging off your car keyring either.
Convenient for Travelers
Electronic wallets can be very convenient for travelers. If your electronic wallet accepts your payment card and you’re traveling abroad, the country you’re visiting most likely will be able to use your electronic wallet as payment information too.
Electronic Wallets Disadvantages
Although electronic wallets offer a lot of advantages, there are, of course, some drawbacks. For the time being you will need a backup payment method.
Dead Phone Battery
Your Phone dying is probably the most major concern of people who use mobile wallets as you know the more apps you use and have open on your Phone the faster the battery is going to die showed your battery die you won’t be able to access your payment information and if you’ve used your mobile wallet electronic wallet to store train or bus tickets then you could end up stranded it’s always best to carry a backup form of payment
Not All Payment Cards Can Be Added to All Wallets
Not all payment cards can be added to all wallets. Your bank must have relationship with the electronic wallet for you to be able to add your card. You’ll know if your card is accepted by the wallet when you try to add. It just takes a few seconds for your electronic wallet to authorize a payment card and you’ll know right away if it’s not going to work.
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Some Mobile Wallets Encroach on Your Privacy
Some electronic wallets encroach on your privacy without you even knowing it. For example, I opened up Google Pay to add a boarding pass for an upcoming flight and saw that Google Pay had already added several store loyalty cards and past airline tickets. I’ve only started to use Google Pay recently and did not give it permission to add anything. The app indicated that it had taken the stored cards and tickets from emails received to my Gmail account. I had not authorized Google Pay to store this information and so I consider this a privacy breach.
Electronic Wallets are Not Accepted Everywhere
Unfortunately, electronic wallets are not accepted at all retailers in United States. The adoption rate is about 50 percent. That means you’ll probably always have to carry a backup form of payment with you in case the retailer that you’re trying to shop at doesn’t accept your mobile wallet. In countries outside the United States, electronic wallet usage is much higher. In some Asian countries electronic wallet uses so widely accepted, that cash is not widely used and so giving change for large bills is another issue.
Retailer Accepts One Wallet but Not Others
Some retailers may accept one electronic wallet but not others. Many electronic wallets are not class cross platform. Samsung Pay does not work on Apple devices and Apple Pay does not work on Android devices. Retailer acceptance depends on the device and electronic wallet app. For example, a retailer may accept Apple Pay but not Samsung Pay. Some retailers only accept their own electronic wallets. Walmart and Starbucks both have their own electronic wallets but accept others as well. As adoption grows amongst consumers, the number of wallets except that retailers will increase.
Michelle writes about cyber security, data privacy focusing on social media privacy as well as how to protect your IoT devices. She has worked in internet technology for over 20 years and owns METRONY, LLC. Michelle earned a B.S. in Engineering from Rensselaer Polytechnic Institute. Michelle published a guide to Cyber Security for Business Travelers