Digital wallets or e-wallets have changed the way consumers pay for various goods and services. Digital payments are slowly becoming a way of life and it has the potential to be the most sought-after type of payment mechanism in future, according to many economists and scholars.
So what is a digital wallet? A digital wallet is nothing but an electronic version of a traditional or physical wallet, through which one can make payments. When a digital wallet is used on a smartphone, it is referred to as a mobile wallet.
With the focus in India shifting towards a cashless economy and a digital future, the government has also been taking various measures to promote and encourage the use of such technology. This has been made possible through the various government-backed digital payment apps such as BHIM app or the Unified Payments Interface (UPI) payments app.
How Does a Digital Wallet Work?
A digital wallet saves card details of the user and lets him/her make purchases online. For example, a MasterPass digital wallet asks customers to first register for the service by entering card details. The information then has to be verified through an OPT authentication process, post which, registration will be complete. After this process is complete, one can choose the ‘Buy with MasterPass’ option as a payment mode on e-commerce websites that have this option. The payment can be made by entering the MasterPass card ID and password and the transaction will be authenticated through a 3D-secure pin or OTP.
Payments for Goods and Services Purchased Online
When payment is made through a digital wallet for goods and services, the time taken will be lesser when compared to credit or debit card payments. Digital wallets can be used for paying utility bills, DTH plans, and mobile bills or to recharge a prepaid connection. Purchases can also be made on e-commerce sites through digital wallets. Most e-commerce sites have tie-ups with many of the digital wallet companies and hence allow customers to make payments through the same.
How to Pay Using a Digital Wallet on an E-commerce Site?
- Log into the e-commerce site. Add the respective product to a cart
- Under payment mode, select ‘Wallet’
- Choose the respective wallet
- Make payment
Application/Scope of Digital Wallets
- Digital wallets can be used to make online purchases from e-commerce websites
- To pay various utility bills such as electricity, prepaid recharge, booking movie tickets, telephone bills, etc
- Can be used to order food online
- Can be used for travel bookings
- Online fund transfer can be made through a digital wallet
- Many financial products such as mutual funds and insurance can be purchased
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Advantages for E-commerce Sites
- There are no geographical limitations when it comes to e-commerce sites. Once can purchase goods from any location
- Saves the consumer time and energy
- Helps the buyer search for a product online and compare prices without having to physically go to different shops
- Easy to compare prices online
- Rewards, cash rewards, coupons and attractive deals offered by e-commerce sites
FAQs of Digital Wallet
- Why should I use a digital wallet?
- Are there any charges or transaction fee for digital wallets?
- Are there cash back and rewards for using digital wallets?
- Where can I use my digital wallet?
- Is it safe to use digital wallets?
- How do I know if the particular e-commerce site accepts digital wallets?
- Are there any transaction limits on digital wallets?
- Is it possible to track purchases on a digital wallet?
- Will merchants be able to access my card details or card number?
- What if the customer changes his bank account or gets a new card?
A digital wallet is a safe, secure and fast mode of digital payment for goods and services. It eliminates the need to carry cash.
Most digital wallets can be used free of cost. However, some service providers may charge a nominal service or transaction fee.
Digital wallets can be used wherever cashless/digital/contactless payments are being accepted.
There are many security features available in digital wallets. Physical card details are not stored in the digital wallet and no transaction can be authorized without a password, pin or OTP.
Check for the name of the wallet in the payments section. It usually appears under the payment mode option, under wallet.
Most digital wallet service providers set a certain monthly transaction limit.
No. All transactions will be carried out only through a digital account number.
The new details can be updated on the digital wallet without any hassle.
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