A mobile wallet is an efficient, trendy, and secured way of making contactless transactions. But, what is a mobile wallet, and how does it work?
After reading this blog, you will understand the definition of mobile wallets, types, examples, and benefits of mobile wallets. You will also learn how these mobile payments work, how to use them, and where you can use them. Again, is it safe to use a mobile wallet for making contactless transactions?
Also, there’s a bonus topic, so keep reading!
What is a Mobile Wallet?
There used to be a time when mobile phones were operated only for talking to people. Soon after, it got connected to the internet, and the whole world became accessible. It can take photos and videos, record audio, store files and important media, along with emails. As years passed by, mobile phones became our best friends. And now it can be used as your personal wallet too!
A mobile wallet is exactly like a real wallet but does not have any physical existence. You can send and receive money, pay bills, pay for products and services, invest, and even take loans. It can manage your credit and debit cards, reward cards, loyalty club memberships, and even reduce the risk of fraud because it is highly secure for anyone to get access and steal money from a mobile wallet.
You can access your mobile wallet with a mobile app installed on your phone. If you are a merchant, you can be listed with your favorite mobile wallet service provider and receive payments for your goods and services.
What is mobile wallet software?
Mobile wallet software is for those who want to start a mobile wallet business in their own brand or company. With a mobile wallet, their agent can transfer money, trade vouchers, partner with international payment gateways, and more.
Types of Mobile Wallets:
There are 3 types of mobile wallets currently available. All these types of mobile wallets are highly versatile and effective.
Open Wallets: This type of mobile wallet lets customers use its funds to make in-store payment transactions, withdraw money in cash, and transfer funds. Such as Master Card.
Semi-closed Wallets: This one allows customers to use its funds and make payments with specific contracts with the merchant and the mobile wallet company. Such as PayPal.
Closed Wallets: This one is issued by a specific company to its customers for buying goods and services from that company only. The fund cannot be used for transactions with other companies or merchants. Such as Amazon Pay
Examples of Mobile Wallet
- Google Pay
- Apple Pay
- Samsung Pay
- Tigo Money
- Orange Money
- MTN Mobile Money
Benefits of Digital Wallets
Digital wallets are available in every form of transaction. It compiles with the most crucial part of a transaction which is security. However, there are plenty of reasons why you should switch to mobile wallets or digital wallets if you haven’t already.
Security encryption: Mobile wallets have safe encryption and secured access methods. Before every payment, the user has to give a patterned password, face scan, or fingerprint ( use any one of these verification methods) to ensure ownership of the wallet.
In case of fraud or theft, nobody can make payment without passing the security credentials. You can also track the history of every transaction amount you’ve made. This feature makes mobile wallets more secure and convenient than physical cards or cash.
Contactless transactions: Making transactions with cash or debit and credit cards can cause vital diseases, and the covid-19 pandemic has been our biggest learning. Consumers worldwide are preferring and supporting more and more contactless payment nowadays.
With a mobile wallet, you don’t have to worry about touching cash that contains germs and bacteria or sign your name in card payments with a pen that hundreds of people have already used before you.
Easy Going and Advantageous: Consumers look for a more convenient way of paying for goods and services. Mobile wallets are easily accessible and advantageous in making payment transactions faster.
After making a transaction, the history is saved in the wallet so consumers can easily pay again to that merchant on the go. It saves the consumers a reasonable amount of time as they are busy with other necessary daily chores.
How does Mobile Payment Work
It’s very easy! Every mobile wallet comes with an app that you can integrate with your PC, phone, laptop, watch, or other smart devices. All you have to do is-
- Download the mobile wallet app to your device
- Create an account by inserting your information (debit cards, credit cards, loyalty cards, national ID cards, etc.)
- Make your purchase in-store or online, and pay via scanning the QR code or inputting required security-related data (such as OTP)
When you’re making purchases, make sure your merchant accepts your preferred wallet or payment gateway.
There are top 5 ways you can use your mobile wallet
Mobile wallets are very handy in making quicker transactions securely.
1. Send money to a mobile wallet: If you want to send money to another person’s mobile phone, it is possible with a mobile wallet. Mobile wallets have made sending or transferring money to another mobile wallet easily without struggling with a complex banking process.
2. Online payments: If you’re a regular online shopper, you will love mobile wallet payments. Because entering your card information every time you purchase something isn’t the hassle, you’d be willing to take. Mobile wallets can automate the process, so you can checkout with a few clicks.
3. On the go payments: You can pay as you go for a product or service on the way to your destination, and something catches your eye. Mobile wallet payments make it easier for customers to avail themselves on the go payments.
4. Pay through apps: It’s always possible to pay for a purchase if you have a mobile wallet app on your phone. You simply need to scan the QR code, tap proceed, and complete the transaction
5. ATM cash withdrawal: You can also use your mobile wallet to withdraw cash from preferred ATM booths around your locality. Though not all mobile wallets provide this service, some of them do, which is really helpful to customers.
Are Mobile Wallets Safe?
Now, as you know what a mobile wallet is and how it works to benefit your purpose, you are probably wondering, is there any security risk?
Let me explain it to you. A unique security code is assigned to your mobile number when you checkout using a mobile wallet. It is safer than your credit card number because the merchant can’t read it. The code is unique and encrypted, so only you can see it. It means that your financial status is hidden from every merchant you transact with. Also, the information you upload to your wallet is encrypted.
You can also set a passcode or fingerprint, so the transaction is only possible with your personalized security protocols. Many mobile wallets have additional security features such as two-factor authentication or one-time PINs.
But in case your mobile device gets stolen or lost, there might be a security risk. So it’s a good idea to stay cautious in such cases. Always check for any suspicious activity on your mobile wallet. There are apps available that allow you to lock your mobile or erase your device data remotely. Always keep your passwords to yourself. And if you see any suspicious changes in your mobile wallet account, change your password immediately to prevent theft or fraud.
Digital Wallet vs Mobile Wallet- What’s the Difference?
People often confuse themselves with digital wallets and mobile wallets. Although they serve quite the same purpose yet, there’s a petite difference between them.
Let me elaborate. Digital wallet is a broader term for software or app that lets you store credit or debit card numbers and loyalty card numbers in the cloud. You can access them from your personal devices such as mobile, PC, laptop, tablet, smartwatch, etc. with a digital wallet; you can make eCommerce payments online, transfer money, and make contactless payments anywhere.
A mobile wallet is a specific category in digital wallet technology. You can access it through an app on your smartphone or wearable device. It lets you pay in an alternative to debit or credit cards while checking out in any store. It also ensures contactless payments for concert tickets, loyalty cards, or travel passes.
Let’s sum it up
Mobile wallets offer a convenient way to make transactions more secured than traditional cards. Merchants around the world vastly accept them. Don’t panic about being too picky while choosing the correct mobile wallet. Choose the one that meets the best of your transaction and payment requirements, pairs best with your smartphone, and use it with confidence.