Digital wallets are becoming a trend in the world of finance and for good reason. If you work as a freelancer on an overseas project, for example, for an essay writing service, are not a fan of traditional banks, or maybe you are a trader, you probably know what digital wallets are!
However, many people are not yet aware of their existence, and they would benefit from knowing how digital wallets work. This aspect is very important, especially because the more information, the more power, and freedom.
Stay and learn with us, this time we will tell you what an electronic wallet is, what the most famous digital wallets are and how this technology works.
Are you ready? Get comfortable in your favorite chair and start taking notes.
What Is an Electronic Wallet?
An e-wallet is a very recent online payment system designed to simplify any virtual transactions that exist today. Thus, with a microchip card or app, consumers can virtually manage their money and make transactions easily and securely at their convenience.
According to LinkedIn, an e-wallet is a mobile banking service that allows users to fully manage their finances from a digital device. Its main feature, as well as its advertising slogan, is that it works from anywhere, anytime, quickly, and easily.
It is also important to note that electronic wallets are not only for personal use, large and medium-sized companies use them as the main means of payment for their employees. Especially if services are offered in another country or a foreign currency.
As with their employees, companies and organizations use digital wallets as a payment channel for their customers. That is, instead of making cash or credit card transactions, they accept transfers to these accounts. Not only will this make your transaction more secure and controlled, but it will also increase the supply of payment channels!
What Is an Electronic Wallet for?
Now you can say you know what an e-wallet is, but what exactly is it for? We’ve mentioned some possible uses above, but this technology was developed for a specific purpose, and the best use would be one that would set it apart from traditional methods of financing.
The simplest answer is that the electronic wallet serves as a substitute for cash, making it easier for the customer or consumer to make transactions wherever they are. However, it is important to remember that it can only be used in businesses or institutions that have the appropriate virtual wallet software.
Moreover, it is not only used to replace cash or credit cards. It includes features very typical of this type of technology, such as creating payment links, reading QR codes, and even buying and selling cryptocurrencies.
How does it work?
The first thing you should know is that electronic or virtual wallets are not linked to a bank. In other words, if you have a debit card that you manage through your regular bank app, you are not dealing with an e-wallet! Neither are neo-banks or digital banks, which perform many functions but have a regulator.
The money you store in an e-wallet is completely independent and is considered a digital asset.
Typically, an e-wallet works when you link it to an active bank account or card. This way, you can make all your virtual transactions quickly and securely from anywhere. For example, if you write essay for money, once you complete your order, you can instantly have money deposited into your account.
On the other hand, you can use it directly as a payment method. In fact, commercial stores that accept digital assets are looking to streamline and simplify the payment process, so virtual wallets are becoming great allies in these endeavors.
Another aspect to be aware of this: to use a digital wallet properly, you should always have a device such as a smartphone, tablet, or computer handy. And in many cases, you must have a stable Internet connection.
The Benefits of E-Wallets Through Digital Platforms or Apps
Now that you know what e-wallets are for and how they work in general terms, let’s look at some of their advantages:
- One of the main advantages of virtual wallets is that they use efficient and completely secure encryption and tokenization technology. What’s more, some of them have a dual authentication system and even ask for a pin code to perform each of the transactions. Thus, in any type of transaction, be it a purchase, payment, or transfer, the other party will not have access to the card or account data.
- The processes of paying, buying, receiving, or sending electronic money are simplified and streamlined because transactions can be done right on the spot, using a laptop or cell phone.
- They are easy to access, as many of them only ask for an email address and password. What happens next will depend on the platform or app you use.
- They allow you to keep a summary of your finances in one place. With their ability to link to other bank accounts or cards, you can decide which account to withdraw money from or deposit it into.
How to Choose an Electronic Wallet?
When it comes to choosing your favorite e-wallet, we recommend that you pay attention to the following points:
- Functionality: the first thing you should think about is the features offered by the wallet and your needs. From the types of transactions, you can make, to the compatible devices you can work with.
- Commissions: this is one of the crucial points of any financial tool you use. As you know, they should simplify your accounts and not create unnecessary costs. Therefore, you will need to carefully research what is right for you.
- Security: check online reviews and ask people you know before you trust all your money in one app. Digital hacks are more common than you think, and you don’t want to fall victim to them.
The Most Used Electronic Wallets
There is a wide variety of e-wallets on the market today; it all depends on what purposes they are used for and how they are used, both by the retailer operating the payment system and by the consumer.
So, let’s start our list with the digital wallet itself. You’ve probably heard of it, as it is one of the oldest in the industry.
Paypal is one of the most recognized digital wallets of recent years, as many platforms, companies, and retailers consider it one of the safest online payment methods on the market.
To do this, you simply need to register on the Paypal site and choose a payment method that will be linked to your account. You can do this in two ways: create a Paypal account to which you will transfer money as you receive it, or link one of your cards or bank accounts only once. That way, you will only need to enter your email address and password for any virtual transaction.
In this case, Payoneer is another type of virtual wallet that, like the previous one, is characterized by a high degree of security and ease of use.
Generally, when talking about this digital platform, the most discussed is its fees, because when sending money overseas or receiving payments from other Payoneer customers, this e-wallet does not charge any fees.
However, if you need to receive payments through the Global Payment Service, Payoneer charges 1% of the transfer amount. Similarly, if you use a billing service as an online merchant and accept credit card payments, you will be charged a 3% fee. Also, note that Payoneer charges its customers a monthly account maintenance fee.
Regardless, it is good to clarify that this virtual wallet allows for local and international transfers in over 60 currencies, and provides a Payoneer MasterCard debit card so that customers can make purchases at any online or physical store in the world.
Very similar to Paypal and formerly known as Money Brokers, Skrill is another type of digital wallet that allows users to make payments, purchases, transfers, and deposits from their bank accounts quickly and securely. And the great thing is that you only need an email address and a password to use it.
Now, if you are thinking about using this Skrill e-wallet, you should keep in mind that when sending money to another country, the user will have to convert it to the local currency before sending it to the recipient. Consequently, it uses the interbank exchange rate as a reference, thus adding at least 4% commission on this transaction.
Finally, in this small list, we will mention Airtm, a fairly new electronic wallet in the world of virtual wallets, which promises great benefits to all who dare to use it.
Its operation is very similar to that of Uber in that it uses a peer-to-peer system that keeps the value of money coming in frozen equal to the dollar and provides the user with secure virtual savings account in the cloud. Thus, the user can dispose of this money as he or she sees fit, being able to convert it into any other currency in the future.
It should be noted that during currency exchange Airtm creates a stable currency AirUSD, backed by the U.S. dollar. This is why this digital wallet is so safe and versatile for all transactions.
With all this information about what a digital wallet is and what its features are, you will now be able to conduct your transactions much faster and safer. Moreover, we have left you a list of the main virtual wallets in use today, so that you can choose the one that you find most convenient for you.