DIGITAL WALLET, E-WALLET, MOBILE WALLET: IS THERE A DIFFERENCE?

29th October 2021

Mobile wallets, e-wallets, and digital wallets are three distinct concepts. With the popularity of digital payments on the rise in Malaysia including the prominence of the e-wallet in Malaysia, it's important to understand the differences so you can choose the ideal wallet for you.

Digital wallets are cloud-based systems that store credit card numbers, debit card numbers, loyalty card numbers, and other information electronically. Your funds remain in your bank account or credit card account. Your information is stored in a digital wallet to make transactions easier. Google Pay, Masterpass, and Visa Checkout are examples of digital wallets. We not only go cashless but also cardless with digital wallets.

E-Wallets are prepaid wallets that must be loaded with funds before making a transaction. It can be accessed by laptop, tablet, or phone via the wallet's website or applications. Storing credit and debit card information, storing funds (e-money), keeping discounts or loyalty credits, enabling payment for purchases at physical or online stores are only a few of the e-wallet functions. Bill splitting, peer-to-peer transfer, and security are all options available in E-Wallets. E-Wallets in Malaysia are becoming part of the trend even allowing companies access to a secure salary payout system for their unbanked employees.

A mobile wallet is an application that you may download to your phone that allows you to "tap to pay" in stores utilizing Near Field Communication (NFC) technology. By accessing a terminal or scanning a QR code with a phone or other devices such as a smartwatch or fitness tracker, a user pays using a mobile wallet.

What Are The Advantages Of Making Use Of A Digital Wallet?

1. Security

It's difficult to tell which technological tools are truly safe to use, but digital wallets are one of the most secure solutions available. If your wallet is stolen, your cash and credit cards are gone in an instant. Payment apps, on the other hand, use encryption software, which means your data is safe and less likely to be hacked. In truth, digital wallet payments employ a token that is only valid at that merchant for that transaction, rather than your actual card number. That means your personal information and credit card data will not be taken if a store or company suffers a cyberattack.

EVOLET offers users access to a secure salary payout system, which is another way that e-wallets enable your digital experiences with more security.

2. Convenience

While not every business accepts digital payments yet, a huge majority of them do, and more plan to do so in the future. When you pay with your global e-wallet, you may conduct transactions more easily, quickly, and securely.

3. Efficiency

Say goodbye to filling out laborious checkout fields while shopping online or rummaging through your purse in the drive-through for your misplaced debit card. Your transactions will be seamless and straightforward thanks to your e-wallet.

4. It's Free

Making the conversion from physical cards to cash is completely free! The majority of transactions made with your e-wallet are free of charge.

Cons Of Using A Digital Wallet

1. You Can’t Use It Everywhere

One of the most serious issues with e-wallets is this. The e-wallet user's accessibility is determined by the phone you have, the stores that use the system, and the nations that accept it. Right now, Alipay, Google Pay, and Apple Pay are the most accepted, although certain nations do not accept them. In theory, you can use them at any retailer that has the most up-to-date contactless credit card terminal, but not every retailer does.

2. They Can Encourage Overspending

While there's no doubting that e-wallets are convenient, they can also be a spending trap for the unwary. When you utilize physical cash instead of digital money, the sorrow of parting with it feels more real. As a result, utilising cash instead of e-wallets is a natural temporary strategy for people who struggle to keep track of their expenditures. This means that utilising an e-wallet may tempt you to overspend, causing havoc with your budget.

3. Giving Away Sensitive Information

Another major concern is the possibility of identity theft and the loss of sensitive data. Even well-educated people run the danger of slipping into phishing traps or mistakenly giving up their personal information since we are culturally unaccustomed to digital transactions. The risk of hacking will only increase as more individuals use the digital platform, especially as the rate of online fraud rises.

Types of Digital Wallets

1. Closed Wallet

Customers can establish a closed wallet for a company that sells items and/or services. The funds in a locked wallet can only be used to perform transactions with the wallet's issuer. The money from refunds, returns, and cancellations are kept in the wallets. A closed wallet is something like Amazon Pay.

2. Semi-closed Wallet

Users can conduct transactions at merchants and locations that are listed in a semi-closed wallet. Although the wallets' coverage region is limited, they can be used for both online and physical purchases. Merchants, on the other hand, must enter into agreements or contracts with issuers to accept payments using mobile wallets.

3. Open Wallet

Open wallets are issued by banks or institutions that have cooperated with banks. Users who have open wallets can utilise them for all transactions that a semi-closed wallet allows, including withdrawals from banks and ATMs and financial transfers.

EVOLET is a digital wallet app for migrant workers.

Learn more at https://evolet.io/