Consumers can now make payments from electronic or digital wallets in stores or when shopping online. Financial companies provide users with information about secure payments which operate through mobile devices.
These providers securely store passwords and information. As a result, customers can avoid carrying debit or credit cards or bank information as they move from one store to another.
Alternative payment methods, especially in high-risk businesses, have been gaining popularity. Users can carry digital wallets on their mobile phones.
These wallets can store loyalty cards, event tickets, gift cards, and memberships. Additionally, users can transfer money to other digital wallets.
How Does a Digital Wallet Work?
A customer’s preferred digital wallet depends on their phone’s operating system.
Users with iPhones lean heavily on iOS-supported services. Those with Android devices rely on Android OS apps. Some digital wallets allow users to split bills quickly with friends.
Ideally, a digital wallet links a customer’s payments from their bank to the vendor through software. This third-party involvement keeps a user’s account safe when dealing with high-risk merchant accounts. Companies like ProsPay help businesses find the best merchant account that is suitable for their workload.
Consumers can use various apps which allow varying access. These include open wallets, online purchases, cashback, or withdrawals. Users can also have semi-closed access which allows specific retailers.
Various technologies are used to process payments in normal and high-risk businesses. First, there is Near Field Communication (NFC). This allows usage of two devices placed close to each other. Both Android and iOS technologies allow this form of payment.
The second is the Magnetic Secure Transmission (MST), which allows users to swipe a card as it generates a magnetic signal.
QR code technology enables users to scan a bar code with their phones to make a payment. Users must find a POS or point of sale system compatible with their chosen digital wallet.
Are Digital Wallets Safe?
Most consumers are hesitant to use new technology, especially in banking. Some would prefer to go through credit card processing than risk trying out new technology.
However, digital wallets have proven to be safe. Their built-in security feature of tokenization enhances their safety by keeping the credit or debit card number a secret when making a purchase.
After making a payment, the digital wallets generate a one-time-use token using random numbers. Using that token keeps a user’s banking information, especially when dealing with high-risk merchant accounts.
Apart from tokenization, a user must go through a series of security layers when accessing the account, improving the security. Some providers require biometric verification, such as fingerprint or facial recognition.
Additionally, in some cases, two-step authentication is also a requirement. Providers also use automated calls to verify users when there are suspicious payments. However, it is also advisable for users to closely monitor their accounts.
What are the Benefits of a Digital Wallet?
If a user is in a business dealing with high-risk merchant accounts, a digital wallet is necessary. Many users also make payments online, and it may be impossible to vet all these merchants.
Additionally, digital wallets promote contactless payments. In the age of the coronavirus, this has become a concern for many users. With a digital wallet, users do not handle germs that can be transferred through cash.
Using digital wallets is also much quicker than using cash. It is also much faster in online payments as users do not necessarily need to enter all their credit card details. Some digital wallets also allow users to win back cash or rewards and accumulate shopping points.
Notably, these wallets are less bulky. They reduce the need for consumers to carry bulky wallets and minimize clutter. They also eliminate the need for paper receipts and make record-keeping easy.
How to Select a Digital Wallet
Users can access digital wallets from Apple or Android devices. These two systems will affect a customer’s preferred wallet. It is impossible to use an iOS-supported wallet on Android and vice versa.
For this reason, a user has to select one that is compatible with their device. Additionally, a user’s shopping retailers can restrict their preferred wallet. It is advisable to go for one that supports multiple merchants, including those with high-risk businesses.
Though having a digital wallet is not a must, they are proving to be highly convenient. Consumers can aptly pay for purchases without carrying around banking information. This heightened security gives customers more confidence when shopping or paying for high-risk merchant accounts.