Why are e-Wallets the Better Choice for Payment Processing?

*This is a collaborative post on why e-wallets are the better choice for payment processing

According to Statista, digital and mobile wallets comprise 49% of total e-commerce transactions worldwide (2021), with an expected market share of 53% (2025). Credit cards and charge cards currently make up 21% but are forecast to decline to 19%. 

Debit cards are expected to stay steady at 13%, and other methods such as bank transfers, buy now pay later, cash on delivery, and direct debit are all staring down the barrel, with declines forecast in the future. 

Momentum is with digital/mobile wallets, particularly across the Asia-Pacific region, where they are the most popular method (60% of all e-commerce transactions). However, in Latin America, their usage is limited to 20%.

What are e-Wallets?

E-wallets, also known as digital wallets, are software applications that serve as an alternative to credit and debit cards. They allow consumers to pay for goods and services quickly and securely without the need to carry cash or provide personal information. 

E-wallets can be used online or offline by storing virtual versions of credit/debit cards on the user’s device. Sometimes, they may store loyalty cards, coupons, tickets, and other items. 

What is the Difference between e-Wallets & Mobile Wallets? 

Mobile wallets are electronic versions of traditional “physical” wallets that store payment card information (i.e., credit card numbers) on the user’s smartphone via an app rather than carrying physical copies of those same cards in their wallet. 

Mobile wallets can make in-store purchases by tapping the phone against a contactless reader at the point of sale (POS). 

The advantage here is that mobile wallets do not require users to enter their payment card details each time they make a purchase; instead, this data is stored securely within the app itself so that it can be accessed quickly with just a few taps. In addition, many mobile wallets also offer loyalty card storage, spending tracking, and budgeting tools. For example, if you enjoy online gaming, you can use PayPal deposits at online casinos to safely add funds to your account. 

E-wallets are similar to mobile wallets but typically offer more features and functionality than just storing payment card information. For example, e-wallets may store loyalty cards, boarding passes, tickets, and other items. 

In addition, e-wallets often come with built-in features such as merchant discounts/rewards programs or peer-to-peer (P2P) payments. Some popular e-wallet apps include PayPal®, Apple Pay®, Google Pay™, Amazon Pay®, WeChat Pay®, Alipay®, and Samsung Pay®.

Where Can You Use e-Wallets?

E-Wallets can be used for online and offline purchases and deposits too. For online purchases, e-wallets can be used anywhere that accepts credit cards. To make an offline purchase, the user must have their smartphone and open the relevant app to find the appropriate payment card information. Once they have located this information, they can tap their phone against a contactless reader at the POS (point of sale).

There are several benefits which include: 

Convenience

e-Wallets allow users to make payments without carrying physical copies of their credit/debit cards. This is especially useful for people who do not like to take cash or tend to lose their wallets often. In addition, many e-wallets offer loyalty card storage, spending tracking, and budgeting tools, making managing finances more manageable. 

E-Wallets allow users to make payments without carrying physical copies of their credit/debit cards. This is especially useful for people who do not like to carry cash or those who tend to lose their wallets often. In addition, many offer features such as loyalty card storage, spending tracking, and budgeting tools, making managing finances easier. 

Security

When appropriately used, they can be more secure than traditional methods such as credit/debit cards or cash. This is because e-wallets typically use encryption technology to protect the user’s payment information from being intercepted by third parties. 

In addition, many e-wallets offer fraud protection features such as two-factor authentication or biometric security (e.g., fingerprint scanning). 

When appropriately used, e-wallets can be more secure than traditional methods such as credit/debit cards or cash. This is because e-wallets typically use encryption technology to protect the user’s payment information from being intercepted by third parties. However, that’s just the beginning of what benefits e-Wallets bring to users compared to traditional financing forms.