What is an electronic wallet?
An electronic wallet, also called an e-wallet or a digital wallet, allows people to more conveniently conduct transactions online. Much like a traditional wallet, an e-wallet contains information about its owner. For the consumer, the main advantages of using an electronic wallet is that it can automatically fill out lengthy forms when making online transactions and can also keep personal details more secure.
User information, such as one’s name, address and credit card numbers, are contained in an electronic wallet. When the user wants to make a purchase, he or she clicks on the electronic wallet and online forms on participating sites are filled in automatically. These time-consuming forms had previously deterred some shoppers from buying online. E-commerce has always been attractive to consumers primarily because it can be more convenient than visiting a brick-and-mortar shop. E-wallets make the process even easier and, arguably, much safer as well.
A common concern held by those who remain wary of shopping online is whether or not their personal and credit card information will be kept safe. E-wallets are heavily encrypted to protect such information from hackers. They are much more secure to use than sending emails or manually filling out web forms that may or may not be sufficiently protected from piracy by the merchant. This added defense against fraud can be appealing to both the consumer and the merchant. The consumer can shop with greater confidence on sites that accept his e-wallet and the merchant can attract business by providing this added assurance.
The merchant can also avoid accusations regarding misuse or loss of customer information. This is because the e-wallet provider acts as an intermediary, assuming responsibility for safe-guarding the e-wallet’s content. In order to support an e-wallet and to use its software, merchants usually either have to pay a fee or a commission to the e-wallet provider.
Electronic wallets can be kept on users’ PCs, but they are now more commonly stored on large central servers belonging to e-wallet providers. Electronic wallets can now also be used via certain mobile devices. Also along this line, companies are introducing mobile phones that can play the role of credit cards — a tap of the phone against a reader instead of the traditional swipe of a card can pay for an item. As cash continues to be eroded by new forms of payment, it is likely that the electronic wallet will continue evolving and being integrated into new technologies.