A digital/e-wallet is an electronic device or online service that facilitates the performance of electronic transactions. It can be put into use by the avid procurer by linking his/her bank account to the digital wallet and exchanging the essential credentials to the merchant’s terminal wirelessly through Near Field Communication (NFC). The facility is designed to be used along with mobile payment systems, which allows customers to make their payments through their smartphones. This article is a detailed account of this new-age payment system.
Mode of Functionality
A digital wallet comprises of a software and information component. The former provides security and encryption for both the information stored in the wallet and the transaction conducted through it. The latter, as the name suggests, is a database for user-input information and consists of details such as shipping address, billing address, preferred payment methods, etc.
The technology is mostly self-maintained and fully compatible with most e-commerce websites and eliminates the constant need of a physical wallet. Also, it enables the e-commerce websites to have a fair idea of the customer, benefitting both the purchaser and the seller.
Server-side digital wallet, which is unlike anything which has been covered here till now, is created by the organizations for the users. It is known for its secure, efficient and added functionalities.
Digital wallet offers:
- A faster payment process, thanks to the non-requirement of specifying lengthy information.
- Round-the-clock banking services.
- Rewards and discounts.
- An economical mode of conducting transactions.
- The tracking of the status of the ordered commodities, especially with respect to e-commerce transactions.
- The maintenance of transaction record.
- The remittance of bills.
Types of Digital Wallets
Following are some of the popular digital wallets used in India:
Stating the obvious, the facility of debit/credit card has revolutionized the mode of transactions conducted across the globe and is by far the most widespread form of cashless payment. The scope of its utilization extends to digital payment apps, PoS (Point of Sales) machines, online transactions, physical purchase, and so on and so forth.
AEPS (Aadhar Enabled Payment System)
AEPS is handy for performing banking transactions such as balance enquiry, cash withdrawal, cash deposits, payments, Aadhar fund transfers, etc. Performed based on Aadhar verification, the facility takes away the need of visiting the respective bank branch, provide debit/credit cards or make any signatures. Users availing this facility must have registered their Aadhar numbers with their personal bank accounts.
UPI (United Payment Interface)
UPI is a system wherein any customer may link one/more bank accounts through a UPI based app and seamlessly initiate fund transfers and make collection requests on a round-the-clock basis. India’s major players in this segment include the likes of Paytm, BHIM, MobKwik, Airtel Payments Bank, Google Pay, etc.
A prepaid money card is an instrument that facilitates the loading of money for procurements.
The facility that has pervaded almost the entire banking sphere enables users to transfer funds, open a fixed/recurring deposit, close an account, apply for new credit/debit cards, view account statements, request for loans, request for cheque books, and a host of other banking functions.
Bharat Interface for Money (BHIM) App
The BHIM app works in collaboration with UPI, and the transactions here can be carried out using a VPA. The app can be used by anyone with a mobile number, debit card and a valid bank account. Through the app, money can be transferred to different bank accounts, virtual addresses or the Aadhar number.
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