Some people still find it difficult to understand the purpose of a digital wallet, but these accounts actually play the same basic role as traditional leather billfolds. Digital wallets create a single convenient place for cash as well as credit, debit and loyalty cards.
Digital wallets enhance security while empowering the user to replace numerous cards and papers with one mobile device. Digital wallets, of course, vary on worldwide location based on different consumer practices.
The European Wallet
Many Europeans use digital wallets that carry cash balances. They have the ability to hold multiple currencies, such as pounds and euros. Users may link debit cards to these wallets and use them to withdraw money from ATMs, but a member normally pays for products and services with funds from an account balance. Wallet providers must handle payment disputes and chargebacks.
People utilize several different methods to deposit money in European-style wallets. For instance, some users transfer the cash out of traditional checking accounts.
Growing numbers of consumers are using digital wallets to transform cryptocurrency funds into money that they can easily spend in shops and restaurants. It’s also possible to make a deposit by charging it to a credit card.
Although it doesn’t provide all of the same benefits, a European-style wallet can replace a conventional bank account. Some consumers and small companies have closed their checking accounts and currently rely on digital wallets to conduct all financial transactions. To benefit from this strategy, a person needs to live in a region where most retailers and service providers accept mobile payments.
Users must exercise caution if they plan to carry large balances. Many governments insure standard bank accounts but don’t protect electronic money. The Federal Deposit Insurance Corporation covers Google Wallet funds. Nevertheless, NerdWallet reports that competitors like PayPal and Venmo don’t have this type of protection.
The European Union hasn’t extended its deposit insurance program to mobile wallets. However, providers must keep the cash separate from their own funds and place it in well-secured bank accounts.
Regulators don’t permit digital wallet companies to supply some of the services that financial institutions offer. For example, they can’t pay interest to users who keep cash in online wallets. Today’s low interest rates diminish the importance of this drawback.
Some providers create other incentives, such as lower fees for people with high balances. Government regulations also forbid these firms from offering loans or allowing overdraft transactions.
EcoPayz Paves New Ground for European Consumers
EcoPayz represents an excellent example of a European-style wallet service. Users can sign up for free, deposit some cash and start initiating transfers or purchases.
EcoPayz VIP users benefit from the most features and pay the lowest fees. There are five different membership levels: Classic, Silver, Gold, Platinum, and VIP. Gold, Platinum, and VIP all enjoy the benefits of free international currency transfers.
PSI Pay is a Fintech company regulated by the UK Financial Conduct Authority. With this oversight and level of government regulation, consumers have become less worried about switching to digital banking. Providing services to local and international markets, PSI Pay reported it’s best financial year increasing business volume by nearly 30% in 2015 and continues to grow.
EcoPayz, with over 10 years of experience in the industry, charges a percentage-based fee to add funds with a credit card, but people can deposit bitcoins and other alternative currencies at no cost. It’s possible to make payments with a pre-paid EcoCard for access to a user’s digital wallet, according to Technotification.
EcoPayz possesses over 10 years of experience in the industry. MasterCard has authorized PSI Pay to supply businesses with pre-paid cards.
British authorities gave PSI Pay and Ecopayz, permission to issue electronic funds in 2011. Re-designing the ecoAccount and EcoCard in 2013, PSI-Pay has seen rapid growth since introducing modern payment solutions.
These services enable companies like EcoPayz to efficiently provide digital wallets and payment cards to their customers.
The American Style
The other major type of wallet has roots in the United States model of commerce. The American digital wallet normally doesn’t hold any cash, and members don’t need to deposit money.
Americans link credit or debit cards to their mobile wallets and use specific cards to initiate transactions. Nonetheless, merchants don’t gain access to personal payment information. Financial institutions usually handle charge-backs rather than wallet providers.
After signing up for an American-style digital wallet, a consumer enters his or her credit card details. The user logs into this account to pay online merchants instead of directly supplying card numbers to retail websites.
This service protects sensitive information and reduces the risk that a customer will lose money to database hackers or dishonest retail employees. However, it doesn’t provide a realistic alternative to a bank account.
Examples of American-style wallets include Masterpass and Walmart Pay. Although a South Korean company owns it, Samsung Pay also fits into this category. Americans have yet to embrace mobile payment services with the same enthusiasm as Europeans.
A survey found that wealthy young people use them more often than anyone else. Millennials are three to four times more likely to have digital wallets in comparison to older U.S. adults.
What attracts some Americans to this concept? The survey results reveal that people express strong interest in the speed and security of these services. Americans want to use ATMs more safely and have the ability to temporarily freeze cards when necessary. Some respondents also desire to send instant payments rather than wait for transactions to clear.
Comparatively few American shops have contactless card readers, and numerous retail employees lack adequate training. These factors continue to limit the popularity of mobile wallets among in-store shoppers.
Nonetheless, many U.S. retail websites have accepted payments from digital wallets for a decade or longer. Experts predict that contactless cards and readers will become common in stores by 2020.
— VanillaPlus (@VanillaPlus) May 13, 2016
European Market Integration
On the other hand, Europeans can use mobile wallets for a tremendous variety of online and offline transactions. Eighty percent of the Netherlands’ point-of-sale terminals permit contactless payments. This makes it easy to pay with a smartphone or charge restaurant purchases without handing the card to a waiter.
British customers of all ages have used social media to demand that retailers install compatible POS equipment. Contactless payment methods will gradually become more popular than cash, according to PSI-Pay’s experts and financial reporting. Their company’s soaring revenues suggest that this prediction may come true.
Financial security trends also give hope to this industry. People have far more confidence in the safety of these transactions than they did in the past, according to survey data. Furthermore, The New York Times reports that fraud only affects about $1 in every $2,750 worth of contactless payments.
Myths and False Information
One proponent dissuading people from adopting contactless cards are false information and myths. Let’s take a look at some of the common myths and debunk them one by one.
One common myth is that contactless cards are not usable with all contactless terminals, which is not true. There are only two types of contactless terminals: magstripe data (MSD) and near-field communication (NFC). The vast majority of contactless terminals only accept MSD, but these older payment methods are being phased out in favor of NFC. Keep mind that contactless cards can always be swiped, much like a credit card or debit card can. In the event the contactless option fails, there are proven backup payment options.
Another myth is that the cost for transition is prohibitive for banks. Yes, it can be expensive – but Visa and Mastercard are actually giving subsidies to the process to lower the cost! These payment solutions stand to gain a tremendous amount from more transactions, so they are willing to cover some of the costs. More importantly, the process of setting up contactless payment options is not a lump sum for a bank – they don’t have to shell out millions of dollars in one fell swoop. Just like any other business process, the process of conversion takes time and the cost is distributed over multiple years. More importantly, contactless cards are actually a big selling point for many consumers – a bank failing to present the option makes them a less attractive option.
No retailers are accepting contactless payment. False! In the U.S. alone, a country that has been very slow to adopt contactless payments, more than 4 million merchants now accept contactless payments. Over 35% of all merchants in the U.S. have contactless payment options now. Granted – it is entirely likely that specific cities or regions may have few contactless payment options, but that can change. In just five years, the US grew from 4% to 35% of merchants offering contactless payment options. The future can be different. Huge international brands, such as Whole Foods, Starbucks, McDonald’s, and Trader Joe’s have adopted contactless payments already – with more to come.
Much like how credit cards and debit cards had to go through some growing pains before they enjoyed widespread adoption, so too do contactless payment options. A significant fear behind contactless payment is fraud, which has been on the rise. However, it’s important to realize that the rate of fraud is correlated with the growth in contactless payment use. The more users use contactless payments, the larger the pool for fraudsters to choose from.
Nevertheless, consumers have been getting skittish with contactless payments. While smartphones have the requirement to verify fingerprints for e-wallet options, other contactless payment options may not have such a deep level of security.
Fortunately, this phenomenon is not new – it was seen when credit cards were first used too. Much of fraud prevention boils down to education. Contactless payment issuers need to learn the spending patterns of individuals, so that fraudulent purchases can be flagged (a practice already done with credit cards). Merchants can also monitor and intercept fraud, such as identify strange behavior like using a single card many times in rapid succession. Nevertheless, similar avenues for fraud already exist for debit and credit cards. As time passes, consumers will be able to recognize and protect themselves against common methods of fraud.
Cultural Norms and Cash-Based Economies
Cultural norms also play a large role. Some countries have a mindset that primes them to adopt contactless payment methods, but other countries (such as Argentina and Japan) have heavily cash-based societies. If a country has struggled to adopt credit and debit cards, then jumping straight to contactless payments is a tremendous ask for banks, merchants, and consumer. When taking a close look at what issues E-wallets and other contactless payment methods seek to solve, it boils down to having faster transaction times, fewer payment cards to carry, and lower fees for merchants.
Sadly, the only global proven benefit that contactless payments guarantee are faster transaction times. Carrying multiple payment cards is hardly a task that requires exorbitant effort from consumers, so contactless payment methods are solving a problem that is incredibly small. When it comes to lower fees for merchants, it’s impossible to beat no-fee cash transactions. In countries that are heavily cash-focused, the argument for costs is weak because contactless payments aren’t competing against higher credit card or debit card fees – it’s competing against cash. Contactless payments will be more expensive for merchants. It’s hard to beat a 0% transaction fee!
Near-field communication has made it possible to link specialized clothing or jewelry to digital wallets and other accounts. Some people have replaced their credit cards with gloves, bracelets, watches or pins.
Kerv Wearables sells a zirconia ceramic ring that U.K. residents can use to pay merchants. Owners don’t need to enter PINs, sign their names, carry smartphones or replace any batteries.
Kerv has partnered with PSI Pay. This alliance enables the company to focus on manufacturing and selling rings rather than setting up a sophisticated mobile wallet system. Kerv benefits from PSI Pay’s affiliation with MasterCard.
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Ring users can conduct business with any online or offline merchant that accepts MC payments. They have the option to deposit bank, PayPal, credit or debit funds in their digital wallets.
As of 2018, a relatively small number of individuals use wearable devices to purchase goods. This holds true because people remain more familiar with plastic payment cards and some account holders feel reluctant to spend money on wearable equipment.
Nevertheless, these contactless devices appear to have a promising future. About one out of four Europeans plan to use wearable payment technology, according to MasterCard.
The European and American varieties of digital wallets don’t offer the same advantages, but they both improve security and save time. Contactless and wearable devices do the same. These benefits could boost their popularity as citizens seek to shorten waiting lines and avoid merchant-specific data breaches.
Although this industry still faces significant hurdles, innovative companies like PSI Pay, EcoPayz and Kerv keep working hard to make personal finance more convenient and affordable for everyone.
To keep up with company news and products updates check out: psi-pay.co.uk