Digital wallet

Adigital wallet,also known as ane-walletormobile wallet,is anelectronic device,online service,orsoftware programthat allows one party to makeelectronic transactionswith another party barteringdigital currencyunits forgoods and services.This can include purchasing items eitheronlineor at thepoint of salein abrick and mortarstore, using eithermobile payment(on asmartphoneor othermobile device) or (for online buying only) using alaptopor otherpersonal computer.Money can be deposited in the digital wallet prior to any transactions or, in other cases, an individual's bank account can be linked to the digital wallet. Users might also have theirdriver's license,health card,loyalty card(s)and other ID documents stored within the wallet. The credentials can be passed to a merchant's terminal wirelessly vianear field communication(NFC).

Increasingly, digital wallets are being made not just for basic financial transactions but to also authenticate the holder's credentials. For example, a digital wallet could verify the age of the buyer to the store while purchasing alcohol. The system has already gained popularity in Japan, where digital wallets are known as "wallet mobiles".In addition, a few US states have adapted digital driver's license and state IDs to be added to digital wallet in lieu of the physical card and it can be used at selected TSA checkpoints at airports, banking or enterprise.

Acryptocurrency walletis a digital wallet where private keys are stored forcryptocurrencieslikebitcoin.

Technology

A digital wallet has both a software and information component. Secure and fair electronic payment systems are an important issue.The software provides security and encryption for the personal information and for the actual transaction. Typically, digital wallets are stored on the client side and are easily self-maintained and fully compatible with moste-commercewebsites. A server-side digital wallet, also known as a thin wallet, is one that an organization creates for and about you and maintains on itsservers.Server-side digital wallets are gaining popularity among major retailers due to the security, efficiency, and added utility it provides to the end-user, which increases their satisfaction of their overall purchase.The information component is basically a database of user-input information. This information consists of your shipping address, billing address, payment methods (including credit card numbers, expiry dates, and security numbers), and other information.

Digital wallets are composed of both digital wallet devices and digital wallet systems. There are dedicated digital wallet devices such as the biometric wallet byDunhill,a physical device that holds cash and cards along with aBluetoothmobile connection. Presently there are further explorations for smartphones with NFC digital wallet capabilities, such as smartphones utilizingGoogle'sAndroidandApple'siOS operating systems to power wallets such asGoogle PayandApple Pay.

Digital wallet systems enable the widespread use of digital wallet transactions among various retail vendors in the form ofmobile paymentssystems and digital wallet applications. TheM-PESAmobile payments system andmicrofinancingservice has widespread use inKenyaandTanzania,while theMasterCard PayPassapplication has been adopted by a number of vendors in the U.S. and worldwide.

Digital wallets are being used more frequently among Asian countries as well. One in every five consumers in Asia are now using a digital wallet, representing a twofold increase from two years ago. AMasterCardmobile shopping survey among 8500 adults, aged 18–64 across 14 markets, showed that 45% of users in China, 36.7% of users in India and 23.3% of users in Singapore are the biggest adopters of digital wallets. The survey was conducted between October and December 2015. Further analysis showed that 48.5% of consumers in these regions made purchases using smartphones. Indian consumers are leading the way with 76.4% using a smartphone to make a purchase, which is a drastic increase of 29.3% from the previous year. This has inspired companies like Reliance and Amazon India to come out with their own digital wallet.Flipkarthas already introduced its own digital wallet.

Security

Consumers are not required to fill out order forms on each site when they purchase an item because the information has already been stored and is automatically updated and entered into the order fields across merchant sites when using a digital wallet. Consumers also benefit when using digital wallets because their information is encrypted or protected by a private software code; merchants benefit by receiving a combination of protection against fraud, faster receipt of payment, decreased transaction costs, and decreased theft loss.

Digital wallets are available to consumers free of charge, and they're fairly easy to obtain. For example, when a consumer makes a purchase at a merchant site that's set up to handle server-side digital wallets, they type their name, payment and shipping information into the merchant's own form. At the end of the purchase, the consumer is asked to sign up for a wallet of their choice by entering a user name and password for future purchases. Users can also acquire wallets at a wallet vendor's site.

Most, if not all digital wallets offer advanced security features e.g.biometric authenticationand encryption, this protects the financial information of the users thus preventing fraud.

European Payments Initiative

With the acquisition ofiDEAL,European Payments Initiative(EPI) Company has announced that it will create an all European digital wallet.

See also

• Online wallet
• Universal credit card

External links

• RFC4112:ECML specification