E-wallet Development: Components, Integrations, Architecture

People’s financial habits are properly intertwined with digital technology since the process of sending and receiving money is as simple as a few taps on a smartphone. E-wallets have become an integral part of everyday technology usage, which intensifies the competition between developers. Along with one of our latest cases, let’s discuss what it takes to develop a competitive e-wallet that will hit the spot of its specific audience.

Here, I’ll share some insights into building an e-wallet application based on our experience at Django Stars. We’ll go through each stage of product development, from the initial discovery phase to the creation of the minimum viable product (MVP), thus placing the right accents for each step in this process.

How does an e-wallet work?

Let’s start by defining what an e-wallet is. Essentially, it’s a software solution that enables allows to make and receive payments without the need for a physical bank card. From a development standpoint, the primary focus lies in the seamless transition of money from physical to digital form and vice versa, while maintaining smooth transaction tracking and statements for users.

Say, when a company pays its employees’ salaries or wages, the money shifts from a traditional bank account to an electronic wallet, effectively converting it into a digital asset. Once the funds are in the employee’s e-wallet, they can use it for various purposes, such as transferring it to a relative’s account, moving it to a standard bank account, or making purchases from vendors partnered with the same digital payment system. This flexibility is crucial, especially for developers managing the digitalization and de-digitalization of funds within such a product. Below, we’ll explore how the transactional engine in such an application operates.

The transactional engine keeps a record of all operations of virtual and conventional money. It registers every instance of turning conventional money into digital money and back.

Finally, an e-wallet stores and gives quick access to other digitalized items that would normally go in a wallet, such as gift cards, tickets, reservations, and even documents. However, for developers, the central thing in this product is its transactional engine.

What to consider when building an e-wallet application

Before starting the development itself, the stakeholders and the tech team must be on the same page about the fundamental characteristics of the product. Usually, the basics of the product are worked out during the discovery phase. Hence, the team can move on, after the following considerations are resolved.

Will it be a closed system? In a closed system, transfers are limited to the wallet and the linked bank account. On the other hand, users can employ their virtual card like a Visa or Mastercard for transactions at any system accepting such payments. One can introduce extra features to the app and determine the necessary compliance certifications for the product.

Will it have the architecture for third-party integrations? Integrating existing software into the system streamlines development and compliance certification, leveraging pre-established technology and standards. Yet, making modifications in this case can be challenging if the API serves as the application’s core.

How the product’s compliance will be maintained? Balancing user convenience with compliance is a challenge when designing the KYC process, but once resolved, stakeholders must define the required user documents and submission methods to kickstart app usage.

How will the app protect user data? Specific state or country requirements may demand a specific location of the servers for the company to pass the necessary security audit.

If you want to have all the pre-development questions about your future e-wallet on the table, feel free to use this cheat sheet with all the questions you need to answer with the development team or before planning the development.

E-wallet pre-development cheat sheet

1. Where will the company be registered?
2. Where do you plan to attract customers: country, demographics, user persona?
3. Do you need a banking license?
4. How will money be deposited into the e-wallet?
5. Do you plan to issue Visa/Mastercard cards?
6. How do you plan to perform KYC?
7. What AML requirements do you need to follow?
8. How do you plan to transfer money: SWIFT, wire transfer, ECH, or SEPA?
9. Do you plan to have cryptocurrency in this e-wallet?
10. Will it integrate with merchants into the e-wallet?
11. Must be done first: desktop or mobile?

Answering these questions will clarify the future scope of the tech team and facilitate further development of the product past the MVP.

Must-do components of an e-wallet

1. User Registration and Authentication: registration, profile creation, authentication, and configuration flow.

2. Personnel Data Management: employee onboarding flow, secure storage, and management of personnel data based on regulatory restrictions.

3. Salary Setup and Processing: salary configuration, management, calculation, and processing from the employer and employee’s ends.

4. Payment Gateway Integration: integration with payment gateways and handling payment transactions.

5. Compliance and Reporting: tools for generating compliance reports and timely reporting features.

6. Data Protection and Privacy: encryption, access controls, and measures to comply with regulatory restrictions for secure handling of personnel data.

7. User Interface and Experience: intuitive interface for trouble-free access to salary details, payment history, and reports

8. Notifications and Alerts: automated notifications and alerts to entrepreneurs and employees regarding salary payments, deductions, and tax obligations.

9. Support and Helpdesk: customer access to support channels to address inquiries and/or concerns.

10. Security and Fraud Prevention: measures to protect against unauthorized access and tools for regular security audits and monitoring to ensure system integrity.

11. Integration with Financial Institutions: architecture that allows for seamless fund transfers and payment processing through integrating with financial institutions or banks and thus compliance with banking standards.

12. Audit and Reporting Trail: maintaining an audit trail for compliance and transparency.

All the components above are supposed to be assembled in an overall architecture of the product, which must be further approved by the company CTO.

Team composition and development costs

Before diving into development, the pivotal stage involves the discovery phase. This initial step aids in defining the target user base, team structure, and product architecture. Plus, it is essential for realistic timeline planning and roadmap creation. A well-executed discovery phase ensures clarity regarding the product roadmap, application features, team composition, and budget.

For instance, in our recent project at Django Stars, the discovery phase was crucial for identifying key use cases for an e-wallet, such as payroll payments and family transfers. This research gave us an idea of the optimal team composition, which included a Project Manager, two Backend Engineers, a Solution Architect, a UI/UX Designer, two QA Engineers, two Frontend Engineers, a Business Analyst, and a DevOps Engineer. With this setup and planned functionalities, this project would take 5 to 7 months and a $400k budget to complete.

In a different case, final estimates will hinge on the specific findings of the discovery phase and how you address the product-related questions listed above.

Building an e-wallet is impossible without addressing compliance, security, and functionality. In the overall process of an e-wallet development, the discovery phase is vital for shaping the product to meet user needs and financial habits, considering factors like system type, third-party integrations, and country-specific regulations.

A thorough discovery phase allows for informed decision-making, efficient timeline planning, and a user-centric product. However, there’s no one-size-fits-all template for scope and budget. Each case is unique, it is the clearest after the future scope of development is defined.