Cash is king, well….
Everyone has a wallet. What about a digital wallet? If you don’t have one yet, you can be sure you’ll need it very soon.
Also known as digital wallets, e-wallets are one of the fastest growing online payment methods in B2C e-commerce worldwide. By 2022, it is projected to account for 50% of global e-commerce sales. According to some reports, the use of e-wallets surpassed the use of credit cards last year globally. For example, in the Asia-Pacific region, the share of this online payment method was almost 60% of transactions in 2019.
This alternative payment method works like a prepaid credit account and stores the user’s personal information and funds. When using eWallet, the user no longer has to enter bank account details to complete the purchase. They are redirected from the checkout to the eWallet page, where they simply need to log in with their username and password to complete the purchase.
The most popular digital wallets include PayPal, AliPay, ApplePay, GooglePay, WeChat, or Venmo. E-wallets also work in combination with mobile wallets, using smartphones’ biometric capabilities to help users identify themselves more quickly and thus complete the payment more quickly.
What is a digital wallet?
A digital wallet, also known as an e-wallet, is an electronic device, online service, or software program that allows one party to perform electronic transactions with another party in exchange for digital currency, goods, or services.
It can mean buying products online using a computer or paying using a smartphone at a physical store. The money must be placed (topped up) in the digital wallet before the transaction, or the individual’s bank account can be linked to the digital wallet.
Users can also store driver’s licenses, health cards, loyalty cards, and other ID cards in their wallets. Credentials can be transmitted wirelessly via near field communication (NFC) to the merchant’s terminal. This is also known as contactless payment.
Digital wallets are increasingly used not only for basic financial transactions but also to authenticate owner details. For example, when using a digital wallet, you can check the wallet owner’s age while buying alcohol. The system has already become popular in Japan, where digital wallets are called “wallet mobiles.”
The following infographics show the popularity of digital wallets:
What technology do digital wallets use?
The emergence of digital money is innovative in the money market. Its distinctive features are transparency, accountability, easy access, mobility, and security.
In recent years, mobile payment has emerged as a new payment method in the digital payment market. Due to its easy access and convenience, e-wallet payments have become the most popular payment method.
Considering that global digital wallet transactions reached $ 4296 billion in 2018 and are expected to reach $ 13,979 billion by 2022, e-wallets undoubtedly look like the future of payments.
The most exciting thing to know is that the innovations in the e-wallet ecosystem have only just begun. Over the next few years, advanced technologies will be integrated into the mobile payment system to make it more secure and convenient. The technology used for this is biometric authentication.
Biometric authentication is a method of verifying financial transactions. It is based on the biological and structural characteristics of the customer/user and includes facial recognition, voice recognition, fingerprint recognition, and eye scanning. Its popularity is due to the increased number of identity thefts and frauds. Biometric authentication is linked to mobile payments as a secure and reliable solution. Because biometric security incorporates the individual’s unique characteristics, it helps address challenges such as a lack of customer confidence in e-wallets.
The types of biometric authentication are as follows:
A face recognition system is a technology that can fit a human face from a digital image or video frame to a database of faces to recognize that person. Then give access to the user and execute the transaction.
Many high-end mobile devices have face recognition features, and fintech companies can incorporate these features for such devices.
Voice recognition is the ability of a machine or program to receive and interpret speech or understand and execute spoken commands.
With the advent of AI and smart assistants such as Amazon Alexa, Apple Siri, and Microsoft Cortana, voice recognition has increased emphasis.
Voice payment users can send money to their friends through platforms like Venmo, Square Cash, or PayPal. These customers use Alexa to make purchases and make banking transactions, such as paying by credit card or wire transfer.
The fingerprint is one of the most common biometric authentication types used in smartphones and many other devices. Fingerprint scanners capture an individual’s fingerprint’s vortices and spine and are a unique form of identifying an individual. Even the fingerprints of the twin sisters are different, which makes the fingerprint extremely reliable.
The latest version of fingerprint scanners assesses the vascular system of an individual’s fingers.
There are two types of eye scanners, retinal scanners and iris recognition scanners.
In retinal scanners, intense light is projected toward the eye, forming patterns of visible blood vessels. These samples are read by the scanner and compared with the samples saved in the database.
The process used for iris scanners is also quite similar. The iris scanner looks for unique patterns in a colored ring around the pupil of the eye.
Both scanning techniques tend to be inaccurate when an individual wears glasses or contact lenses. The photograph can also deceive these techniques.
What may the future look like?
As the use of smartphones for shopping and banking increases, of course, biometric technology will also become more prominent.
According to Juniper’s study, the number of mobile payments made with biometric authentication will reach $ 2 trillion by 2023. Juniper also points out that biometrically verified mobile commerce transactions will account for 57% of total biometric transactions in 2023. In 2018, that number was only 28%.
Besides, Juniper estimates that about 90 percent of current smartphones support face recognition. At the same time, 80 percent of smartphones can support voice-based authentication. The study also predicts that by 2023, more than 1.5 billion smartphones will use software-based biometric technology.
Well, everyone has a wallet. What about a digital wallet?
Do you already have yours?