E-wallet emancipates e-commerce merchants from the fear of being abandoned, as it inculcates sense of security and implants frictionless checkouts
Back in 2009, when I gifted a wallet to my father (who traditionally kept cash in his pockets), he called my gesture – an immature irony. On being questioned about his statement, he justified it by quoting “When you spend money to buy a wallet and store back your money in the same wallet, you are surfing on the board of irony”.
Come 2017, I transferred money digitally to my father’s e-wallet. I didn’t have to spend anything on the physical wallet. And this is when he called this process an astute methodology.
Mobile payment landscape has evolved a lot in the last decade. When does a product replace something effectively? When it offers the traditional features along with the new sweeteners which could grab customer’s attention and let them jump into the new system. It should promise the customers that “The change would not take away anything from them, but it would only add incentives to the existing system and of course their lives”.
E-Wallets have promised to add agility to the daily transactions. Throughout the length of e-wallet’s existence, it has assured compact banking, hassle-free settlements and solidly built payment system.
The precise definition of e-wallet goes like:
an electronic pond which is responsible for storage and transaction of money, whose application is platform independent, is universally accepted at par and integration is homogeneous with the banking system.
“An electronic pond…”
Electronic pond refers to an electronic system, which is programmed in such a way that it hosts every kind of processing which a physical wallet/master cards are capable of. In layman’s term, an electronic pond is congruent to the indispensable environment for any kind of transaction.
“…which is responsible for storage and transaction of money…”
It means that the pond should be able to store the virtual money in the system and should be able to handle all the transactions efficiently as any alternative payment modes like cash, debit/credit card.
“…whose application is platform independent…”
The nature of the transaction should be seamless and platform independent. The money settled in the pond should be able to be accessed on all the platforms(be it mobile or desktop). There shouldn’t be any loss in the data while toggling from one platform to the another.
“…is universally accepted at par…”
The virtual money in the electronic environment should be globally accepted at par level (forex exchange). A customer would never use the digital payment if the additional cost is appended with the existing overhead cost. Any kind of commission through transaction won’t be tolerated by traditional buyers.
“…and integration is homogeneous with the banking system”
The integration of electronic pond should assure user a homogeneous banking experience. Transfer of funds from bank to the wallet and wallet to the bank should be easy. Also, the data should be homogeneously fed on all the platforms and should be reflected in concurrent and consistent transactions.
The applications of e-wallets are fairly visible in the market of e-commerce. E-commerce has started to place it reliance majorly on payment method e-wallet. The extensive features and facileness in transactions have made e-wallets a significant source of alternative payment. The concerned buyer is supposed to replenish his e-wallet by passing on his bank credentials to the merchant.
Most of the eCommerce merchants have appended an inbuilt wallet system in their UI now, known to be supported by some of the secure payment bridges. Secure payment bridges demand PCI compliance from the stores. Digital Wallets increase the security of the transaction since the wallet typically does not violate card details to the website.
E-Wallet Kingdom: Subdivided into Three Domains: Each Domain Decides the Scope of Usability
E-wallet system is sub-categorized in three systems. According to the Reserve Bank Of India’s guideline, wallets are further divided into three systems
- Closed Wallets
- Semi-closed wallet
- Open Wallets
Each wallet system decides the scope of usability and amount of transaction.
- Closed wallets refer to that kind of wallets which are issued by the companies to their customers.
- A customer could replenish the wallet as per their desire.
- A customer is bound to use the replenished amount only for the company which issued it.
- Refunds from canceled orders or returned items are sent back to the wallet.
- A customer can redeem the amount in the next purchase.
- Issuing companies don’t need permission from RBI for transactions.
- Companies may get interest from the amount fed in the wallet.
Semi Closed Wallet
- Semi Closed Wallet requires RBI approval for its setup.
- These are the wallets which are used for the purchase of goods and services.
- These wallets can be used for both online and offline transaction.
- They can be used for paying bills, financial payments, buying goods and services, etc etc.
- These wallets can’t be redeemed or used for cash withdrawal.
- These wallets are managed by non-banking agencies.
- Banks and non-banking financial agencies have no prerogatives to issue semi-closed wallets.
- They are required to partner with a bank and then deposit this money in an escrow account(an escrow account is a temporary pass through account kept under the third party during the process of a transaction between two parties).
- Interest on these deposits depends on the negotiation ability of the payment company and relation with the bank.
- These wallets are similar to semi closed wallets at many levels.
- They can be used for the purchase of goods and services.
- The resemblance in purchasing financial services like funds transfer at any card accepting merchant locations.
- It also allows cash withdrawal at ATMs/Banking Correspondents.
It was first found in the form of M-Pesa in Kenya. M-Pesa quickly captured a significant market share for cash transfers along with the global attention. It stretched to 17 million subscribers by December 2011 in Kenya alone.
Some of the Mind-Arresting Stats Regarding E-Wallets
- According to the reports from Global newswire, global e-wallet market revenue flickered around USD 594.00 billion in 2016 and is expected to reach approximately USD 3,142.17 billion by 2022, growing at a compound annual growth rate of around 32% between the period 2017 to 2022.
- com confirms that PayPal is the most preferred digital wallet by the inhabitants of U.S. Around ¾ of the digital wallet customers prefer PayPal as their payment gateway, followed by Google Wallet at 15% and Apple Pay at 12%.
- 44% of the transaction in China is made through e-wallets. Alipay hits the chart with 30% of e-wallet revenue.
- Here is the list of top e-wallets used by the respective countries:
|The United States Of America||PayPal, Apple Pay, Google Wallet|
|United Kingdom||Skrill, OFX(UK), TorFX(UK)|
|Australia||OFX,TorFX, Optus Pay|
|India||PayTm, Mobikwik, Freecharge|
The Bonuses of E-Wallet: Get Prepared for Fluidity in Transaction
It can’t be denied that e-wallet saves ample amount of time in the transaction. The advancement in e-wallet systems has compulsive benefits stitched to it.
Secure Payment: Shields you from Online Embezzlement
Since e-wallets don’t seek for credit/debit card or any other payment credentials, the system becomes impregnable to fraudulent/ or nearly any kind of embezzlement. The payment is done through the wallet application and funds can be transferred to and from the bank.
The e-wallets are programmed in such a way that the software of it grants security and encryption for the personal credentials and for the actual transaction. Traditionally, digital wallets are stashed on the client side and are easily self-maintained. Their compatibility completely matches with the system of e-commerce websites.
A server-side digital wallet is one that a company creates for you. Your details and profiles are managed on the server. The core reasons why server side digital wallets have received a massive outpour in the market among major retailers are due to its- secure channel, efficiency, and mounted utilities provided to the end-user, which enhances their gratification of their overall purchase.
Less Cash in Hand: Diminishes the Parallel Economy
Diminishing cash usage contributes to national interest and personal interest as well. People often treat cash as a commodity(and store it) rather than treating it as a medium (keep it in circulation). According to the monetary principle of Gresham’s law “bad money always drives out good”. This leads in stashing the important currency and results in contributing to the black economy.
The digital wallets help in curbing down the cash inflow and keep the records of every transaction- in favour of national interest.Also, carrying cash of small denomination has become a pain in the neck. They are also susceptible of getting stolen or torn. E-wallet removes the adversaries related to cash.
Easy to Operate: Simple to Access
The operation of e-wallets is relatively simple in comparison with any other payment modes like credit card, debit card etc. E-commerce has ensured one-touch payment through e-wallets. Credentials are not required, OTPs are outdated. Just link your bank account, card details to the e-wallet and reap down the benefits of electronic transfer in much simpler way. A lot of e-wallet companies offer promo codes and schemes for looping into the online transactions.
Enhances the Probability of Loyalty Management: Elevate Conversion
E-wallet tracks the record of every transaction. Analysis of each and every transaction can be used to throw loyalty programs to the regular user. Loyalty programs can be transferred to the customers, based on their performances in the wallet. Promo codes, target coupons, and schemes could lure the customers, resulting in the faster checkout process. This, in turn, enhances the conversion rate.
Fast Transaction: Faster Checkout Process
The headache of filling the forms and details is obliterated in the electronic wallet payment. Along with the traditional method of paying purchase bills through online banking, it has also become possible to transfer money through a mobile number.
The details are stored in the wallet and are comparatively secure than other mediums. It is also free of cost.
Also, the slow internet could dampen the spirit of online buyers. According to Adbot India, a digital marketing agency reports, more than 15% of customers in India desert their shopping carts because of multiple pages on the checkout. It is cited as the biggest curse for the e-commerce industry. The lesser the length of sale funnel, faster the checkout and repeat orders.
Easy Refund: A Quick Relief to Unsatisfied Customers
Returns and cancellations are part and parcel of e-commerce industry. With e-wallets into the picture, refunds are much easier than the conventional process. Refunds are sent to the e-wallet of customers and they are allowed to redeem the fund in the next purchase. This makes it an engaging affair for the users. Just a few promo products here and there, and with the availability of money in the e-wallet, you are just a click away from the final purchase.
The Barriers Against E-Wallet: A Brief Survey on Why People are still Quizzical about Usage Of E-wallets
Claims by statista.com say that there are 43% of the non-wallet users in The United States Of America, and they have their own reasons to not accept it.
- 49% of the non-wallet users believe that it is easier to pay through cards. The possible reason could be because of poor first processing experience or lack of information about its operation.
- 43% of the users think that it is unsafe to use it. Possibly because of less information about its method of processing.
- 16% of the populace have poor mobile UI or their mobiles don’t support the m-wallet.
- 11% are unaware of where to use the e-wallets.
- 7% are not even aware of e-wallets payment mode because of no specification on the portal.
- 6% of users don’t have availability of e-wallet feature from where they purchase.
Issues Faced by E-wallet Companies: Remedies to Overpower Them
Problems Due to Slow Internet/Weak Server:
- Wallet To Wallet Transfer Issue: Sometimes the slow internet is the root cause of transactional failures. In the case of wallet to wallet transfer, if there is a failure in the transaction, then the only remedy which e-wallet companies have opted for is – sending back the money to the sender. There is no pending or the middle stage. This guarantees the safe transaction and augments the customer’s trust into digital payments.
- Wallet to Bank Account Issue: This again is caused either by slow internet or due to the fallen server. Sometimes, bank timeout and session expiry are also the cause of ushering the transaction in limbo. This is still the prevalent stumbling block in the online transaction. In such cases, money is either sent back or is stuck in the middle.
E-wallet companies are just like your bank. It is important for the customer to trust in it. E-wallet companies that have a partner bank, follow the same method as banks. They have a 24×7 customer call center.
Problems Due to Fallen Payment Corporations:
- Wallet To Bank Transfer Issue: E-wallet to bank account issues may arise due to fallen payment corporation. In few of the cases, wallets don’t get the confirmation for the down switch of payment corporations.
- In such occurrence of down switches, customers will have to contact e-wallet service provider. They have the helpdesk that is available 24*7. Customers can raise their disputes in the application itself, on the transaction history log, via grievances department, email or over social media platforms like Facebook or Twitter.
Problems Due to Manual Filling:
- Wallet to Bank Transfer Issue: On few of the occasions, e-wallet companies have to send the request or message to the bank manually. Manual errors are inevitable. Due to errors in manual entries, transactional errors are bound to happen.
The e-wallet companies process such messages and batches in every 24 hours. After they are manually processed, banks have to resolve these requests from their end. Now, it really depends on the processing of bank. The processing speed of each bank varies.
- General Remedy
There is a general perception regarding transactional abortions. The e-wallet companies are held responsible for any kind of misfired transactional attempts, regardless of poor internet service, or server down from the bank sides. Thus, when it comes to transactions between e-wallets and banks, the bank reference number is allotted to the user. For any issue from the bank side, a customer is supposed to quote the reference number and follow up with all the details directly.
Ways to Filter the Best E-wallet for your Application/Portal: A Definitive Process to Slog On
Filtering an e-wallet for your system should rely on elementary objectives like hassle-free experience and agile processing. Your system shouldn’t compromise the time of customers. It should not instill the fear of security in them. It depends on the business values and modus operandi you ride on. Here is the list of references which should ease your selection from the pot-pourri of options:
Pliability of the Wallet: Should be Flexible With the Requirements
Pliability is one of the most talked and misunderstood word in the technological era. Not many could understand the right context of it. Whatever wallet you choose, check its compatibility with your system. Check if it is multilingual and its operation is widespread if not omnipresent. Also, look if it could provide the universal-currency operations. Clear yourself about the total transaction time taken by the system. If any of the above points are not met, the opted wallet might limit your operation, resulting in decline(or no rise) of sales.
Frictionless Checkout: Shouldn’t Put Customers through Trials and Tribulations
A frictional check out process may put customers through all kind of trials and tribulations. This may lead to a loss in sale. Frictionless check-out should hit the right chords of e-commerce. It is something which can magically convert a lost sale into a long lasting potential customer. It is extremely important for your wallet bridge to offer a simple layout. It improves the entire user flow and payment gets faster. Look out for those e-wallet gateways which can proffer you some sharp-witted features like one click payment, multi-linguistic processing, remember me checkbox.
Technical Integration Should Be Smooth: As Flat As a Pancake
The technical integration between e-wallet gateway and your store should be as flat as a pancake. A complex integration may lead to a perplexing situation, which might kill the efficiency of your store. It has to be trouble-free and fleet-footed (exceedingly speedy). Smooth integration also satisfies your developers who have to work with it. Watch out whether a few adjustments, here and there, a click or to integrates your system with the wallet.
Stress Over Transactional and Processing Fee: Should Be Negotiated Beforehand
When you are involved in an e-commerce business, don’t get surprised by the additional charges of the payment service providers. Prepare yourself for every kind of expenses. Also, some wallet system may charge you the transaction fee. Make sure that transaction fee is not added to your overhead cost. If you charge your customers, they might avert any kind of purchase on your portal.
Also, in order to compromise the fee, you might end up in compromising the security of the customers, along with the important features like agility, flexibility, and scalability.
To avoid additional charges, make sure that you understand the terms prior to the integration. Hidden charges might prove to be very dangerous for your online store. Clear everything at the beginning, settle the dust, once and for all.
Secure Tube: Should Safeguard the Interest of Customers
Security is the most questioned and worried attribute in relation to the online transaction. Check whether the e-wallet company is eligible safeguarding the credentials. Analyze about its data encryption techniques and its propensity in shielding the data. Ask about SSL certification and if they meet the most important security level, i.e, PCI 1. Make sure you also filter the providers in terms of fraud protection agreement. Along with safeguarding the interest of customers, you are also supposed to defend your brand value(or to create one if you are new in the market).
Strong Help Desk: Should Be Able To Help Anytime, Anywhere
When queries are not addressed at the real time in e-commerce, frustration rise to a crescendo. Choose your wallet based on its “anytime, anywhere” credo. Issues in e-commerce shouldn’t halt the seamless experience of the users. It should be resolved, lightening quick.
The use case of E-wallet is very easy in comparison to other payment modes. The global e-wallet revenue is all time high and with the innovation and security features fed by e-wallet companies, it is expected to cover as many as ⅔ of earth’s population by the year 2022. The particular trend of e-wallet has been a huge part of overall strata of e-commerce. It is one of those thick strata of e-commerce which protects cart abandonment and doesn’t let a user surrender their choices at checkout.