A digital wallet, also known as an electronic wallet, is a service that allows you to pay for your online transactions through an application on your device (phone/tablet). One of the main advantages of using a digital wallet is you don’t have to carry physical cards or a physical wallet.
A digital wallet system securely stores user credentials and verifies them during transactions.
How does it work?
You need to first register on a digital wallet app to use a digital wallet. Once you have registered, you need to add a bank account to your digital wallet. A digital wallet saves the users’ card details and allows them to make online transactions in the future.
Technologies used by the digital wallets:
- QR codes: A QR or quick response code is a type of matrix barcode that contains the information required to initiate payments.
- Near field communication (NFC): NFC is a technology that helps two smart devices communicate with each other within a distance of 4 centimeters or less.
- Magnetic secure transmission (MST): It is an advanced technology that uses magnetic signals to establish a connection between the smartphone and the terminal.
There are many popular digital wallets available worldwide, such as Google Pay, Apple Pay, Amazon Pay, Samsung Pay, PayPal, Cash App, Walmart Pay, etc. Naturally, the Covid-19 pandemic led to a rise in the use of digital wallets and their massive adoption across the world.