DIFFERENCES BETWEEN CLOSED AND OPEN DIGITAL WALLETS

13th May 2022

A digital wallet is a payment service that allows people to send and receive money using a mobile device or a desktop computer at no cost to the sender or receiver. An E-Wallet, on the other hand, allows you to store various credit card and bank account details in a secure environment, eliminating the need to enter account information when making a payment or doing an e-wallet transfer to the bank.

Once you've registered and created an E-Wallet profile, you'll be able to make payments faster and with less typing. A prepaid digital wallet is a type of electronic gadget that allows users to conduct electronic transactions. This can include using a computer to purchase products online or using a smartphone to purchase in a store.

Closed wallets are those that enable the purchase of products and services from a single provider. They do not have a cash withdrawal or redemption option.

Semi-closed wallets, which have a contract with the issuer to accept payment instruments but do not allow cash withdrawal or redemption by the holder, and which allow the purchase of goods and services, including financial services, at a group of clearly identified merchant locations/ establishments.

Payment instruments issued by commercial establishments for usage only at their particular enterprises are known as closed system payment instruments. Cash withdrawal or redemption is not possible using these forms of wallets. Free charge credit, Ola money, and so on are examples of such wallet systems.

What Is A Digital Wallet?

A digital wallet (also known as an e-wallet) is a software-based system that stores users' payment information and passwords for a range of payment methods and websites in a safe manner.

With near-field communications technology and a digital wallet, customers may make transactions fast and easy.

Digital wallets reduce the need to carry a physical wallet by securely and compactly storing all of a consumer's payment information.

In addition, organisations that collect consumer data may benefit from digital wallets. The more data a corporation has on its customers' purchasing habits, the more effectively it can market to them.

Consumers may experience a loss of privacy because of this. Many people in poor countries can now use digital wallets to engage more fully in the global financial system.

Participants can take payments for services given as well as receive monies or remittances from friends and family in other countries using digital wallets.

Because digital wallets do not require a physical bank account or branch, they often allow those in unbanked and underbanked communities, such as low-income or rural areas, to be served, allowing for greater financial inclusion.

Types Of Digital Wallets:

1. Closed Wallet

End-users might have a tight bond with a corporation that sells goods or services. Close wallet users can utilise their spare funds to do online transactions with the wallet's issuer. Money from returns, cancellations, and refunds is sent to a secure server that is also accessible through the wallet. Amazon Pay is the best example of a locked wallet available.

2. Semi-Closed Wallet

Users can make purchases from merchants and locations specified in a semi-closed wallet. Despite the wallets' limited coverage area, they can be used for both online and offline purchases. Merchants, on the other hand, must enter into contracts or agreements with issuers in order to accept mobile wallet payments.

3. Open Wallet

Banks or entities that have partnered with other banks issue open wallets. 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. Open e-wallet systems have made bank transfers quicker and more efficient.

Advantages Of Open, Closed, And Semi-Closed Wallets

1. Open Wallet

- It can be used to withdraw money.
- Swiping cards are used to purchase goods or products.
- Used for both mobile and online banking.

2. Closed Wallet

- Receive cashback and refunds.
- Purchasing products and services.

3. Semi-Closed Wallet

- Used to buy goods from affiliated merchants.
- Money transfer between wallet owners.

Examples Of Digital Wallets

1. PayPal One Touch™

The PayPal One Touch™ app is an addition to PayPal's standard services. It allows users to skip the login screen and avoid entering passwords, allowing them to make payments or transfer funds faster. PayPal's mobile wallet app can be used on a computer, laptop, or tablet as well.

2. Apple Pay

The Apple Pay digital software has been streamlined and is only available for iPhone, iPad, and Apple Watch customers.
It enables users to do transactions both online and in-store. Users can unlock their phones and hold them near a suitable point of sale system for in-store transactions. The Apple Pay app makes it easy to make payments by making them smooth and safe.

3. Google Pay

Users can use their Google Account, Google Play, Chrome, YouTube, Android phones, and watches to make purchases on any app or website using debit or credit card information maintained in their Google Account, Google Play, Chrome, YouTube, and Android phones and watches. Other electronic papers supported by the app include student ID, movie tickets, gift coupons, store cards, and transportation tickets.

4. Evolet

EVOLET provides simple tools to make your wage payment system smoother and efficient. The application's built-in payroll administration system handles wage management for employers.

Employers benefit from a streamlined process flow that includes quick reconciliation, backup, and record maintenance. As a result, there is less chance of payment data loss, and human computation errors are eliminated.

EVOLET's salary management solution makes it seamless and efficient for everyone involved. It removes the need for employers to withdraw funds from the bank, lowering the danger of robbery or theft. This is also true for employees who send money to family members back home. This task can usually take up to half a day once a month.

EVOLET offers easy-to-use tools to make your salary payment system seamless and efficient.

It is well-suited to two types of workers: migrant workers and low-wage Malaysians. Many migrant workers in Malaysia, both documented and undocumented, find it difficult to acquire a bank account.

According to Johnson Yu, the creator of EVOLET, certain nationalities find it impossible to open bank accounts since their nations have been red flagged by Bank Negara, even if they have work licenses and visas. Because they do not speak Malay or English, many migrants suffer a language barrier.

For ethnicities such as Nepalese, Bangladeshis, Filipinos, and Indonesians, who make up over 60% of Malaysia's foreign labour, the EVOLET application has been transcribed into 12 different languages.

Advantages Of A Digital Wallet

- A digital wallet securely keeps all of a user's payment details in a little amount of space. As a result, the necessity to carry physical wallets is considerably reduced.
- Digital wallets can be quite useful for businesses that need to acquire user data for marketing purposes. They learn about consumer purchasing habits and improve the effectiveness of their product's marketing strategies. Consumers, on the other hand, lose their privacy as a result.
- By embracing digital wallets, many developing countries may be able to improve their involvement in the global financial sector.
- Users can send money to friends and relatives who live in distant countries using digital wallets.
- Digital wallets also eliminate the necessity for real banks and businesses to open and maintain bank accounts. As a result, they connect people and companies in rural areas.
- To make cryptocurrency transactions and keep track of balances, you'll need a digital wallet.

EVOLET is a digital wallet app for migrant workers.

Learn more at https://evolet.io/