FINANCIAL SERVICES
The world of finance is full of confusing jargon but sometimes , happily , you stumble across a word or phrase that almost defines itself – like digital wallets . Put simply , digital wallets allow consumers to store and spend funds digitally . This could be real money , linked to a payment card , or something else like loyalty points or discount coupons .
Digital wallets are becoming an increasingly central component to the way we pay and transfer funds – so how are they being used , what technologies are driving them and what can we expect to see in the coming years ?
What are digital wallets ? Digital wallets differ from simply paying online because they allow the consumer to save payment information for later by adding a debit card into the app . When it ’ s time to pay , the user can do it straight from their app by holding their smartphone to a card reader without needing to remember or re-enter their payment credentials .
But digital wallets also do much more than just paying bills . As their name suggests , they can accommodate anything a traditional wallet can – from resort passes to boarding cards , movie tickets to loyalty vouchers . The exponential growth of this technology in recent years has allowed consumers to leave their clunky leather wallets at home , accelerating the move towards cashless payment .
As digital wallets have become more integrated into our smart devices , companies like Apple , Samsung and Google – which provide the operating systems for those devices – have become some of the biggest players in digital wallets . Retailers like Alibaba and Walmart have also got involved while payment platforms such as Paypal , Venmo and Cash App , which offer digital wallets to their customers , have grown into some of the biggest financial enterprises in the world .
Aside from their convenience at the checkout , digital wallets have the potential to solve a cross-border banking problem that was traditionally disjointed and difficult to navigate .
Laurent Descout , CEO and founder at payments platform Neo , explains : “ When working with traditional banks , opening an international bank account is a difficult , long and painful process – and the transactions themselves can add further days .
“ THE NUMBER OF UNIQUE DIGITAL WALLET USERS IS PREDICTED TO GROW TO 4.4 BILLION BY 2025 ”
JUNIPER RESEARCH
“ Fintechs are enabling businesses to set up their own international account with a multi-currency IBAN in their organisation ’ s name . Virtual wallets then ease the process for making same day payments . Businesses can use them to organise funds and store multiple currencies , ready for executing rapid payments or a currency exchange .”
What technologies are driving digital wallets ? Digital wallets start with a digital core , which can be thought of as the building blocks
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