Mobile wallets are one of the most convenient digital payment methods. From this article, you’ll get to know how they function and why you should try them.
In 2020, the total global spend through mobile wallets equaled $5.5 trillion. According to Juniper Research, by 2025, this number will reach $10 trillion. People value mobile wallets for the speed, comfort, and security of financial transactions. From this article, you’ll get to know about the primary advantages and a few minor shortcomings of this payment method.
What Is a Mobile Wallet and How to Use It
A mobile wallet is an app that stores your financial credentials and enables you to carry out different types of transactions: from peer-to-peer money transfers to pay in online stores and at offline checkouts. You can transfer nearly all the contents of your physical wallet to this app: banking cards, bonus cards, and gift cards of different shops’ driving licenses, transportation passes, tickets to events, and so on.
To pay for goods or services with a mobile wallet, you should find a contactless payment symbol at the checkout and put your smartphone close to the payment terminal. Your device will communicate with the terminal utilizing the NFC (near field communication) technology. Then, you’ll need to confirm the transaction by either entering a password or tapping a button in the wallet.
Alternatively, you can use this app to scan barcodes and retrieve information from them.
Three Types of Mobile Wallets
The first type is bank’s and card provider’s apps. Visa Checkout and MasterCard Masterpass belong to this type as well as mobile apps of banking institutions.
Google Pay, Samsung Pay, Apple Pay, and Microsoft Wallet can serve as examples of smartphone-specific mobile wallets. You introduce your credit or debit cards’ data into such an app to carry out online or offline payments.
Finally, there are stand-alone apps such as PayPal, Genome, Due, Chase Pay, and so on. Unlike the two previous types, these ones were initially built for financial transactions rather than for enhancing the services of brands with another specification.
Benefits of Using Mobile Wallets
Users appreciate mobile wallets for the following five reasons.
- They save time. When you pay online, you don’t need to manually type your card’s number, its CVV, and its holder’s name. This data is already confirmed within the app. In an offline shop, you don’t need to wait long in a queue because each payment takes just a few seconds.
- They have intuitive interfaces and it’s very easy to use them. Mobile wallets save you from the necessity of carrying dozens of paper cards with you. In a shop, you don’t need to look for the right card. You can easily store and manage all your cards in one app.
- They provide exceptional security guarantees. Your mobile wallet will encrypt your private data and will never share it with any third parties. Vendors who receive your payments will never get to know your financial credentials. You’ll need to confirm every transaction by either a password, or your fingerprint. The security system of your smartphone can additionally protect your mobile wallet with passwords, fingerprints, or face ID. If you lose your smartphone or someone steals it, thieves will hardly be able to access your funds.
- You can easily track your expenses. Your mobile wallet will store detailed information about all your transactions. You’ll be able to check your last week’s or last month’s expenditure in a couple of clicks. Moreover, many mobile wallets enable their users to set limits for selected categories of expenses — thanks to them, you won’t be able to spend on shopping more than you can afford.
- You might get special offers and additional bonuses. The developers of mobile wallets might offer these perks on their own initiative. Alternatively, they can team up with brands that provide goods or services.
Plus, mobile wallets help businesses to save time and money. The more customers rely on this payment method, the fewer live human cashiers stores need and the quicker the checkout process is.
Shortcomings of Mobile Wallets
Apart from the obvious benefits, mobile wallets have a few minor shortcomings. However, you can easily overcome most of them.
First, you become dependent on your smartphone. If you leave it behind, or it runs out of battery, or your network connection is too poor, you won’t be able to pay for anything. To prevent this problem, you might want to always carry a few banknotes with you.
Second, if a business wants to accept payments from mobile wallets, it needs to buy special hardware or software to facilitate the transactions. If an organization wants to build its own mobile wallet, it needs to hire skilled and experienced engineers. The process of building an app of this type might require a lot of time and money.
Third, not all merchants support mobile wallets yet. Some merchants don’t accept this payment method at all. Others would accept only one or two most popular mobile wallets, which might create inconvenience for customers.
In the previous passages, we emphasized the security of mobile wallets. However, many smartphone owners fail to enable all the protection tools that they have at their disposal. They don’t use passwords or face ID — so if someone steals their device, they risk losing all their savings.
Finally, the problem of reckless spendings remains relevant. Digital money has been around for a while — yet some people still tend to lose control over their budget if they can’t touch their money. They might behave too impulsively and purchase things that they can’t afford — simply because it’s so easy to do it.
As you see, the disadvantages of mobile wallets are mostly related to their owners’ habits. As for the shortcomings related to technology diffusion, businesses should be able to overcome them soon.
Mobile wallets are a safe and convenient payment method that is becoming more and more popular every year. You might want to start using it because it will save you time and effort. Plus, you’ll be able to control your expenses through a handy interface and, maybe, receive special offers and different bonuses.