What Is an E Wallet and How Does It Work

An e-wallet is a digital wallet that stores your payment information and allows you to make transactions online or in-store.

It's essentially a virtual version of your physical wallet, but instead of carrying cash and cards, you can access your funds and payment methods through your mobile device or computer.

E-wallets are designed to be convenient and secure, using encryption and other safety measures to protect your financial information.

They often integrate with popular payment methods, such as credit cards, debit cards, and bank accounts.

An e-wallet is essentially a digital version of your physical wallet, storing all your payment information securely and compactly on your mobile device. It's designed to make transactions easier and more convenient.

Digital wallets use your mobile device's wireless capabilities, such as Bluetooth, WiFi, and magnetic signals, to transmit payment data securely to a point of sale. This technology allows you to make payments without having to physically swipe a card or enter a PIN.

QR codes are used to initiate payments with your device's camera and the wallet's scanning system. NFC is another technology that enables two smart devices to connect and transfer information using electromagnetic signals, requiring the devices to be close to each other.

Magnetic secure transmission (MST) is used by Samsung mobile phone users, generating an encrypted field that the point of sale can read. However, Samsung has phased out MST features for Samsung phones from 2021 onwards to focus on NFC.

Here are the different technologies used by digital wallets to facilitate transactions:

There are several types of digital wallets available, including Cash App, Apple Pay, Google Wallet, and PayPal, each with its own unique features.

These digital wallets can be categorized into three main types: closed, semi-closed, and open wallets.

A closed wallet is restricted to certain individuals, such as a company's customers, and can only be used to transact with the issuer of the wallet, like Amazon Pay.

A semi-closed wallet provides ease of use by storing multiple public addresses while keeping private keys offline, but users may need to share a key or password with another person before making a transaction.

An open wallet can be used to manage and track payment information online, and can be downloaded to any device or browser with an internet connection, making it compatible across all platforms.

Here are some examples of each type of digital wallet:

Apple Pay is an example of a well-known digital wallet that allows you to access your financial products through your devices and make purchases.

Digital wallets like Apple Pay can be accessed through various devices, such as smartphones and tablets.

PayPal is a digital wallet platform that also offers peer-to-peer payment and money exchange services.

Some digital wallets, like PayPal, have a digital wallet included in their app, making it easy to manage your finances on the go.

Apple Pay is a popular digital wallet that has gained widespread acceptance as a secure way to make payments.

There are several types of digital wallets available, each with its own unique features and capabilities. Some of the most well-known digital wallets include Cash App, Apple Pay, Google Wallet, Samsung Wallet, PayPal, Venmo, AliPay, Walmart Pay, and Vodafone M-PESA.

Most digital wallets attempt to distinguish themselves from their competitors with different methods. For example, Google's digital wallet service allows you to add funds to the wallet on your phone or device.

Digital wallets can be broadly classified into three categories: closed, semi-closed, and open. These categories help users understand the capabilities and limitations of each type of wallet.

A closed wallet is restricted to certain individuals, such as a company's customers. For example, Amazon Pay is a closed wallet that stores money from returns and cancellations and only allows users to transact with the issuer of that wallet.

A semi-closed wallet allows users to make transactions at listed merchants and locations, while storing multiple public addresses and keeping private keys offline for safety purposes.

An open wallet can be used to manage and track payment information online, and can be downloaded to any device or browser with an internet connection. This makes it easy to use and compatible across all platforms.

Here's a breakdown of the three types of digital wallets:

The European Payments Initiative (EPI) is a significant development in the e-wallet space. It's a company that has acquired iDEAL and plans to create an all-European digital wallet.

With the acquisition of iDEAL, EPI aims to create a seamless payment experience across the continent. This digital wallet will likely integrate various payment systems.

EPI's digital wallet will likely support digital currencies, enabling users to make transactions using these alternative forms of payment.

JomPAY is a convenient way to pay your TNB bills online. You can access it through Internet Banking, Mobile Banking, and ATMs of various banks.

You can use JomPAY to pay your bills through 42 internet banking sites, as well as through your Credit Card. The payment limit varies based on the limit set by the customer or the bank.

To use JomPAY, you'll need to know the Biller code, which is 5454, and your TNB Account Number.

Digital wallets are designed with security in mind, encrypting personal information and transaction data to protect against fraud. This encryption is provided by the software component of the digital wallet.

The information component of a digital wallet is a database of user-input information, including shipping and billing addresses, payment methods, and other sensitive data. This data is stored securely, making it difficult for unauthorized parties to access.

Biometric authentication and encryption are advanced security features offered by most digital wallets, protecting the financial information of users and preventing fraud. Some digital wallets, like those using Google's Android and Apple's iOS operating systems, also use NFC technology for secure transactions.

A digital wallet's security features make it an attractive option for consumers and merchants alike. With digital wallets, consumers don't have to fill out order forms on each site, and merchants receive protection against fraud, faster payment receipt, and decreased transaction costs.

Hardware wallets are one of the most secure methods to store funds. They're a must-have for anyone serious about protecting their assets.

Difficult to use while mobile, as they're not designed for scanning QR codes. I've had friends struggle to use their hardware wallets on the go, but it's worth the extra effort for the added security.

Loss of device without proper backup can make funds unrecoverable. Make sure to set up a backup system to avoid this nightmare scenario.

Some wallets have the ability to operate as a full node, which means no trust in a third party is required when processing transactions. This is a game-changer for those who value independence and security.

Full nodes require a large amount of memory, so be prepared for a significant investment. Don't worry, it's worth it for the peace of mind that comes with knowing your funds are secure.

Some wallets are open-source and can be built deterministically, which helps ensure the code hasn't been tampered with. This is a big plus for those who want to verify the integrity of their wallet software.

Digital wallets offer a secure way to make online purchases, and one of the reasons is that consumers don't have to fill out order forms on each site because their information is already stored and automatically updated.

Their information is encrypted or protected by a private software code, giving consumers peace of mind.

Consumers benefit from using digital wallets because their information is protected, and merchants benefit by receiving 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.

Most digital wallets offer advanced security features such as biometric authentication and encryption, which protects the financial information of the users and prevents fraud.

Digital wallets have both a software and information component, with the software providing security and encryption for personal information and transactions.

The software is typically stored on the client side, making it easy to maintain and fully compatible with most e-commerce websites.

A server-side digital wallet, also known as a thin wallet, is maintained on an organization's servers and is gaining popularity among major retailers due to its security, efficiency, and added utility.

The information component is a database of user-input information, including shipping addresses, billing addresses, payment methods, and other details.

Digital wallets can be composed of digital wallet devices and systems, with dedicated devices like the biometric wallet by Dunhill holding cash and cards with a Bluetooth mobile connection.

Smartphones with NFC capabilities, such as those using Google's Android or Apple's iOS operating systems, also enable digital wallet transactions through mobile payments systems and digital wallet applications.

The M-PESA mobile payments system and microfinancing service has widespread use in Kenya and Tanzania, while the MasterCard PayPass application has been adopted by various vendors in the U.S. and worldwide.

One in every five consumers in Asia is now using a digital wallet, representing a twofold increase from two years ago, with 45% of users in China, 36.7% of users in India, and 23.3% of users in Singapore being the biggest adopters.