eWallet: The Future of Money is Here
It is the dawn of the digital era. We have come across various digital currencies, online banking facilities, and eWallets etc. eWallet is here to stay because of the convenience it offers. Carrying physical money all the time can be a lot of hassle. This is where eWallets come in place. It is an alternate payment method that is slowly, but surely gaining traction.
Technology has come a long way. Back in the old days, people did not trust online banking facilities due to security lapses. However, times have changed, and we have amazing advancements in banking security and cybersecurity. These advancements have helped to pave way for eWallet.
There are different types of eWallet services available online. We will talk about these services in a while. All of these services have one thing in common: they digitize your money. Digital money means that you no longer have to worry about carrying your wallet everywhere.
Moreover, you no longer have to worry about getting your wallet stolen either. All your money is digitally available on the cloud. This means that you can access your eWallet from literally anywhere from the world as long as you have internet.
eWallet and the Ease of Access
Making payments from your eWallet can be as easy as scanning a QR code. So, there is no learning curve to using eWallets. eWallets can easily be used by anyone. Moreover, they are quicker than using bank accounts to pay for things.
eWallets make transactions easy and more secure. The likes of biometric and other security protocols make this payment method secure.
Types of eWallet
eWallets are used for the same purposes as physical wallets. They are used for completing different transactions. However, the usage of a eWallet can be limited by the type of eWallet you are using.
Companies that provide digtal wallet services have partner banks in respective countries. These partner banks are responsible for all the transactions. Furthermore, partner banks give interest to the companies that help setup the eWallet. For example, if you use Apple Pay, the partner bank pays interest to Apple for the capital that is stored by consumers in their eWallets.
That is how different companies are able to sustain their eWallet services.
There are three kinds of eWallets prevalent around the world:
Closed wallets are provided by companies that need to refund the money of a customer. These eWallets have the refunded amount, but the consumer is restricted to using this money on the company’s website. This is the reason why it is called a closed eWallet.
You cannot withdraw the amount to use it as per you like it. Companies such as Uber, MakeMyTrip.com, or Flipkart.com etc. provide closed wallets. You can deposit money in these wallets, but cannot use it for other transactions except for the one authorized with the company.
Semi-closed wallets are the most famous kinds of eWallets in the market. Paytm wallet is a semi-closed wallet. You can learn more about their wallet over here.
To operate semi-closed eWallets, it is necessary to have an approval from the governing body of the region. Semi-closed eWallets allow you to use them online and offline. You can use them to pay for shopping, fees, utility bills, and insurance premiums etc. at merchants which have a contract with the eWallet company and the bank.
According to the law, banks and non-banking financial companies are not allowed to offer semi-closed wallets. Hence, that means only non-banking companies can render this service. These companies are required by the law to have an escrow account with a partner bank.
When you deposit money in your semi-closed wallet, it is stored in the escrow account. The money sits in the escrow account until you use the money. The partner banks give interest to the companies on the amount that is kept in the escrow account. The interest rate depends on the agreement between the two parties.
Open wallet service is only provided by banks or in partnership with banks. These eWallets have all the capabilities of a semi-closed wallet. Moreover, you can use these wallets to transfer funds or withdraw cash from ATMs and banks.
Most mobile banking apps have open eWallets for their customers.
eWallet and Digital Wallet Are Different
The Paytm wallet is a eWallet. However, services like Apple Pay and Google Pay are digital wallets and not eWallets. You cannot use the term ‘eWallet’ and ‘digital wallet’ interchangeably.
eWallets require you to deposit money in the app before you can use them. They work like a prepaid account. You can only spend the money if you have enough balance. In digital wallets, you save the details of your credit and debit cards. These details are then used by the digital wallets for quicker and easier transactions.
With digital wallets, you no longer have to carry your debit/credit cards with you. Digital wallets bring a lot of ease access, but they have their caveats as well.
eWallets help you to stay cardless as you do not need to enter your card details in these applications. As long as you have money deposited in the wallet, you are good to go.
On the other hand, we have services such as PayPal that provide eWallet and digital wallet services both. The access to two types of services in one app has made them very popular with consumers.
How to use eWallets?
You can refer to the image below to get a better insight on how to use eWallets.
eWallets and digital wallets are the future of money. eWallets and digital wallets are two different concepts and both terms cannot be used interchangeably for each other. With advancements in technology, we have been able to have eWallets.
There are three kinds of eWallets: closed, semi-closed, and open wallets. All of these wallets have their advantages and disadvantages. Open wallets have the most features for customers.