A digital wallet (or e-wallet) is a financial transaction application that runs on a mobile device. So how does the digital wallet work and how to use digital wallet? If you do not know yet, let's take a look at the article below .
What is Digital wallet?
A digital wallet is an online payment instrument or software application that acts as an electronic version of a physical wallet. Also known as an e-wallet, e-wallet, or mobile wallet, it enables users to securely store digital versions of payment methods credit and debit cards, gift cards, cryptocurrency, boarding passes, event tickets, passwords, and coupons for use with their smartphone or smartwatch on the go.
Customers can use the digital wallet to make purchases in store, online, or through the digital wallet app. For in-store purchases, they typically use a contactless payment terminal by tapping a contactless credit card or a payment-enabled smartphone or smartwatch on the contactless payment terminal.
How does the digital wallet work?
Different digital wallets use different technologies to process payments:
Near Field Communication, or NFC: This allows two devices to exchange information when they are in close proximity to each other. Apple Pay and Google Pay use this technology. To use one of these digital wallets, merchants must have a compatible card reader at checkout .
Magnetic Secure Transmission, or MST: This creates a magnetic signal, just like when you swipe the magnetic stripe on your credit card. The signal is transmitted to the card reader of the payment terminal. Samsung Pay uses both MST and NFC technologies.
QR codes: These are barcodes that you can scan with your smartphone camera. For example, in the PayPal app, you can generate a QR code that allows you to use your account to pay for items in a store.
While the digital wallet examples above can be used at any merchant that accepts them, there are also "closed" digital wallets, such as the Starbucks app, designed to be used only at specific stores.
How to use digital wallet?
To use a digital wallet, users need to enter their bank card information into a digital wallet app or website. The information is encrypted and the wallet can be used once the device is unlocked and the user authorizes the wallet. To make a mobile payment, The user holds the smartphone close to the contactless terminal.
I hope this article will help you to learn how does the digital wallet work and how to use digital wallet. Essentially, instead of sending your actual credit or debit card number to the merchant when you pay for something, the digital wallet generates a one- time-use token consisting of random numbers. This token is used to process payments while your personal information remains secure.
