The Rise of the Mobile Wallet | Making Payments with Your Phone
Technology has made many things in life much easier, from communication to working to accepting and sending payments. Of all technology achievements, the smartphone is the ultimate one. Thanks to it, we can do most things with a single click (or two) on our phones from wherever we are.
What started as a means of communication on the go has turned into an all-in-one device. Apart from doing all the things it does, the mobile phone now can even pay for you. Yeah, seriously! There’s no need to look for your money or credit card; just take out your phone and make a payment with it. Sounds incredible, doesn’t it?
Making payments has never been easier thanks to the rise of the mobile wallet. You can use it to store credit cards, debit cards, gift cards, and ID cards to pay with phone instead of a card. But what exactly is a mobile wallet? How can be used? Why it’s so useful?
Let’s read on to find the answers to these and many other questions!
What Is a Mobile Wallet?
A mobile wallet is a type of digital wallet accessible on your smartphone. It stores credit card numbers, debit card numbers, loyalty card numbers, and coupons. You can use it for in-store and online payments.
While the mobile wallet is still on the rise, a lot of stores have already accepted it as a payment method. Hence, you can use it just like you’re using a contactless credit card.
More and more people start using this payment method because it’s much more convenient than credit or debit cards and cash. Learn more about Mobile Payment Solutions.
Types of Mobile Wallets
There are three main types of mobile wallets:
- Open wallets – used by banks directly or via a third party. They allow users to make payments or withdraw money in cash.
- Closed wallets – used at specific merchants. They allow users only to make payments at specific merchants.
- Semi-closed wallets – allow users to make payments at various merchants as long as theirs is a contract between the mobile wallet company and the merchant. Users can also withdraw the funds into their bank account but not in cash.
Some of the best-known mobile wallets in the world are:
Keep in mind that not all mobile wallets suit your needs. Also, now all can be used in all situations. That’s why you need to choose the wallet that best suits your needs and can be used for the purposes you intend to use it.
How to Create a Mobile Wallet?
In order to use a mobile wallet, first, you need to set it up on your smartphone. To do that, you need to install the Wallet app. Many smartphones have it preinstalled, so you just need to launch it to use it. However, if your phone doesn’t have it, you have to download it and install it.
Once you have the Wallet app installed, you just need to launch it, take a photo of your credit card, debit card, and any other cards you want to store in your mobile wallet. Alternatively, you can enter their information and then follow the step-by-step instructions.
Keep in mind that, although you can store information of multiple cards in your mobile wallet, you can choose only one card as a default payment option at a time. Hence, if you want to use another card for making a payment, you’ll have to change the default card before making the payment.
How Do Mobile Wallets Work?
As mentioned above, you need to either take a photo of the card(s) you want to use for making payments or enter their information. Regardless of which way you choose, the information stored is linked to an accepted personal identification format, such as a scannable QR code or a key.
When you make a payment with your smartphone, the app uses near-field communication (NFC) technology to connect to the point-of-sale (POS) system in the store. The NFC technology uses a key, a QR code, or another personal identification format to process payment.
Is the Mobile Wallet Safe?
A lot of people are worried about hackers stealing personal information and bank account (referring to credit card and debit card) information. But you don’t have to worry about that because all the information stored in your mobile wallet is encrypted, which makes it difficult for hackers to hack it and steal from your cards.
Moreover, unlike physical credit and debits cards which can be stolen or copied, mobile wallets are pretty aren’t. This is because they come with encrypted keys that don’t reveal all information. Hence, they are much safer to use.
Lost or Stolen Phone?
For most of us, losing or having our phone stolen means the end of the world because we keep our life in it. And, with a mobile wallet, all your credit and debit cards’ information falls into someone else’s hands.
Fortunately, there is a way to take care of and protect your card data. There are apps that allow you to remotely delete or lock all your device’s data, including the wallet app.
How to Use Your Mobile Wallet?
In order to use a mobile wallet as a payment method, first, you need to find a merchant that accepts your chosen payment gateway. Those merchants usually have a wi-fi symbol nearby their POS system.
Using your mobile wallet for making payments is effortless. You need to open the Wallet app, choose the card you want to use, hold the phone a few inches above the payment reader, and wave or tap your smartphone to activate the NFC technology.
When the payment is made, the merchant receives a message for the payment. They, then, need to honor the message alert to complete the transaction.
The Benefits of Using a Mobile Wallet
Contrary to what many people think, mobile wallets are much more secure than physical ones. First of all, all the data they contain is encrypted for ultimate security. Also, there are features like fingerprint and/or password lock, biometric or selfie authentication, and a locking feature in case of stolen or lost phone. This not only secures the user’s data saved in the wallet but also helps reduce financial scams.
Using your mobile phone for making a payment is very simple. You don’t have to look through your pockets, wallet, or bag to find your credit card. You just need to launch the app and wave or tap to pay. That’s it!
Anyone with a smartphone can create and use a mobile wallet. This is of crucial importance in countries like Chine and India where hundreds of millions of people don’t have a bank account. Regardless of whether there are no banks or banking isn’t feasible, the mobile wallet helps people in those countries enjoy the benefits of a bank account.
Faster Transaction Times
Using a mobile wallet is not only super-convenient for the user but also for merchants. It’s because a mobile payment transaction is processed in 6 seconds whereas card payments take 15 seconds.
One of the reasons the mobile wallet has become so popular is that it provides value to customers. It’s because they provide great security and safely store the information of the user’s bank account, credit/debit card, loyalty card, and gift card. Hence, users can rely on their mobile wallets and rest assured their finances are in good hands.
The competition among mobile payment services like Apple Pay, Google Pay, and others, is very big. To stay on top of their competition, they have developed several loyalty programs for their users. Through them, they offer bonuses and rewards to the users for using their payment wallets.
Faster Cash Flow and Reduced Expenses
Mobile wallets accelerate users’ cash flow since the electronic funds transfer to a business account takes less than 3 days. Also, they reduce your ink and paper expenses as you can text or email the receipts to your customers instead of printing or writing them down.
And, last but not least, mobile wallets are accepted by a lot of people around the globe. We love the digitized world we live in since it makes our lives much easier. Having a mobile wallet is another blessing technology has given to us and we can’t but embrace it.
The History of the Mobile Wallet
Once upon a time, the mobile wallet was invented. Actually, Coca-Cola was the company that started the first type of mobile payment by allowing customers to purchase drinks via a text message. Later, the same year, Exxon Mobil created the contactless payment.
In 2006, PayPal’s mobile payment service has arrived in US and UK, which paved the way for mobile payment technology. As it has become more and more popular, the company has evolved its digital payment technology, which resulted in a mobile wallet payment service.
The Rise of the Mobile Wallet
Technology constantly evolves and leads to creating products that make our lives easier. The mobile wallet is undoubtedly one of the most useful and helpful technological innovations. It not only allows us to pay on the go but also allows us to access our finances no matter where we are. Plus, it keeps all our credit cards, debit cards, and other cards’ data safe and sound.
While there was never a doubt that the mobile wallet will replace the physical one and the credit/debit card, one thing has accelerated its boom and made it global. It was the Coronavirus – Covid-19!
Covid-19 and the Mobile Wallet Boom
What was once seen only as an effortless way to make payment had turned into a life-saver after the Coronavirus outbreak.
When Covid-19 pandemics took over the world, our lives have changed forever. We had to learn to live alone, separated from our family and friends. Also, we had to change our habits: we’ve turned to our mental health, started focusing on our well-being, and changed the way we do things. Two of the habits we’ve changed the most were the way we shop and pay.
We started shopping online pretty much everything we could buy: food, house products, clothes … everything. And, when we had to go shopping in-store, we started using credit/debit cards instead of money to make payments. It was because it’s contactless and dirty-less. We didn’t have to touch money or accidentally touch other people’s hands while handing over the change. It was much more convenient and safer!
Before the pandemic, mobile wallets were seen as an effortless way to pay for your goods. But, when the pandemics broke out and touching money, POS systems, credit cards, and other people’s hands became a big NO, the mobile wallet became THE WAY to make payments safely, from a distance.
The biggest reason people started using the mobile wallet was that it allows for contactless payment. It was seen as a “clean” method for making payments, which was most important for people.
Using a mobile wallet allows people to pay for what they buy without touching anything. It allows people to take control over their hygiene, reduce contact with bacteria and virus-rich items like money, coupons, and POS systems.
As the UK Payment Markets 2021 report shows, there was an increase of 75% of people who registered for mobile payments in 2020 compared to 2019. This trend is expected to continue since people got used to the changes made with the outbreak of the pandemic.
The Future of the Mobile Wallet
Based on the history and the rise of the mobile wallet, we believe that the future of this payment method is bright and will continue to rise in popularity.
The mobile wallet is an accessible and convenient way to make payments no matter where you are. It’s a safe and clean payment method that allows for fast transactions and reduces the chance of financial fraud. And, due to being accessible, convenient, and safe, it will impact the evolution of mobile payment processing in the years to come.
At the time, mobile wallets are quite developed and allow for accessing bank accounts and making contactless payments. However, they will undoubtedly evolve in the coming years and will have much more features and even greater security.
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