Everything has gone digital, if something hasn’t yet, it will soon. 

This is not even an understatement. Entire businesses, organizations and services have gone digital. As we are galloping toward a digital world, there are very few things that are left untouched by this phenomenon of digitization.

Digital wallet payment solutions are becoming extremely common. They are quick, easy and also secure. This has led to an era of digital wallets or e-wallets. Most of us use them on a daily basis and sometimes, there are situations where we can’t get by without them. 

Let’s take a technological deep dive and see their types, pros, cons and future implications.

What is an e-wallet?

A digital wallet or as sometimes called e-wallet is an umbrella term for a range of technologies that let you pay for things. Not only that, it stores your tickets, passes and gift cards.

An app, software, card or any other technology that you can use to make transactions without needing cash is a digital wallet. E-wallets are usually used for wallets that help in making online payments. Here, we will use them interchangeably.

How do they work?

Imagine a digital version of your regular wallet. One that allows you to make e-payments from a digital service, without compromising the security of your actual financial information. 

A digital has two components:

1.Software component: This provides security and encrypts the information stored in the wallet and the transaction that is being conducted.

2.Database component: This stores user-information and details like shipping address, billing address, payment method, etc.

An electronic payment works with an application installed on the user’s smartphone. This is why wallet app development is supremely important to understand the process. The functionality of wallets, further, depends on the delivery technology or the type of wallet in question.

Types of E-wallets

There are three types of digital or e-wallets depending on the delivery technology.

  1. Closed wallets: A company that sells products or services can build a closed wallet for its customers. The money stored in this type of wallet can be used to transact with only that company which has issued the wallet. These wallets are online accounts where the money of refunds, cancellations, returns or gift cards are stored. Some companies earn interest on such deposits. One example can be that of Walmart pay.
  2. Semi-closed wallets: Even though the coverage area of such wallets is rather restricted, these are still prevalent in the system. This is because they can be used to transact online and offline and buy anything. This ranges from goods, services, payment of fees, to premiums, provided the merchants have a contract or agreement with the issuer to accept the payments. 
  3. Open Wallets: These wallets can only be issued by banks or non-banking institutes if partnered banks. These wallets serve a dual purpose of performing all the transactions of semi-closed wallets plus withdrawing cash at ATMs or banks and transfer funds.

Pros of E-wallets

  • These wallets are smarter than regular wallets. Not only do they provide the best transactional experience but they also help you organize your finances. Paying freelancers with electronic money is the best way of payment as they usually work online. 
  • They are very easy to operate. The users can very swiftly and easily pay for the service or product in the online store. There is no need to remember all the card details as they can be saved online.
  • They are also secure. The data in digital wallets is encrypted. The transactions are secure and no third party or hackers can easily steal anything. 
  • These are more affordable as well. E-payments can be done sitting at home and therefore eliminates the need for going to the bank to make transfers. This also means that you don’t have to pay service charges, overdraft fees and can only pay a minimum fee on a premium card.

Cons of E-wallets

  • Digital technologies are still misunderstood and considered riskier than regular payment methods. Not all consumers as well sellers have such contactless payment methods. Basically, you can’t find them everywhere you go, yet.  
  • Most of the peer to peer payment apps require mandatory Internet access which is not available everywhere. This con will soon be gone as the internet is slowly becoming omnipresent.

Future of the Digital Wallets


According to research conducted by Juniper Research, cited by the Wall Street Journal on November 13, the global number of digital wallet users could be doubled by the year 2020

140 million people used Apple pay as a digital wallet in the year 2018, this number will increase to 227 million making it the most popular digital wallet in the world.

Google Pay is estimated to reach 100 million users in 2020, up from 39 million users in 2018. 

Samsung Pay, on the other hand, is predicted to also have 100 million users in 2020 which was 51 million in the year 2018.

The total transaction value in the digital payment sector reached US$4137.523 billion in the year 2019. 

This value is projected to show an annual growth rate of 12.8%, which will result in the total amount of US$6,699.201 billion by the year 2023. 

The market is led by Digital Commerce with a total transaction value of US$3,391. 727 billion in 2019. 

As reported by Statista, the number of mobile proximity payment users stood at 0.95 billion worldwide in the year 2019 and is estimated to surpass 1 billion users in 2020.


The Final Say

Digital wallets or e-wallets let you perform a multitude of tasks and not just make payments. Users can make purchases from e-commerce websites, pay utility bills like electricity, prepaid recharge, book event tickets, book travel tickets, order food online and even purchase mutual funds and insurance.

Every party, whether it's the buyer, seller benefits from the protection and convenience. Merchants benefit because they're more protected against fraud and they sell more products, faster. While consumers get safe and fast transactions that so they don’t queue up in the billing lines. 

The future is mobile, and well, so is the present!

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