Types of Ewallets and Their Issues & Challenges in 2022

Types of Ewallets and Their Issues & Challenges in 2022 In contrast to the traditional cash/card payment methods, E-wallet is built on encrypted software technology instead of an analog wallet. It provides a secure environment for the users to store ‘n’ numbers of debit/credit cards and bank accounts, mitigating the need to fill up payment details on every monetary transaction.

Most of the customer-facing E-wallet services operate through smartphone apps. It requires users to register within the apps and create an E-wallet profile that grants them access to make instant payments.

The online payment market is seeing another futuristic technological advancement with the introduction of NFC (Near Field Communication) chip-enabled smartphones. The integration of NFC into digital payment allows the users to make in-shop payments via their E-wallet by just placing their NFC-enabled smartphone within three-four inches of the contactless reader or pay pad. As almost all of the smartphones manufacturers have started equipping their mobile devices with NFC, contactless payments look like the reality of the near future.

Countries across the world are supporting online payments via E-wallets for all types of transactions to track financial transactions and decrease black money occurrences. The digital wallet trends are at their peak and are expected to grow in the coming future.

If measured geographically, the major contributor to the growth of the E-wallet market in North America, followed by Europe. The market for E-wallet services is segmented on the basis of application, type of e-wallets, and modes.

Types of Ewallets When it comes to types of e-wallets, the market is divided into three categories, closed E-wallets, semi-closed E-wallets, and Open E-wallets.

In the case of closed E-wallets, the user can only facilitate payments to the wallet issuer only. Whereas semi-closed E-wallets allow users to get the financial services by only those merchants which are allowed by the wallet issuer. Both the closed and semi-closed E-wallets types don’t permit cash withdrawals.

The open E-wallets go beyond the limit of closed and semi-closed and also allow users to withdraw money via ATMs or Banking correspondents. Among all the types of e-wallets, open e-wallets are the most popular ones.

Ewallets by Mode The evolution of E-wallets has introduced us to new technologies which include digital wallets and mobile payments. These two modes of E-wallet payment may sound identical but are very different.

By 2027, the mobile wallet market will reach USD 7,580.1 trillion from USD 1,043 trillion with a CAGR of 28.2%.

Almost every type of e-wallets requires users to store their payment information such as bank accounts and Credit/Debit cards and allow them to pay at any POS terminal. Digital wallets users are not required to carry their plastic money along with them as the wallet directly pulls out money from the accounts. However, digital wallets cannot keep cash balance within the application.

On the other hand, mobile payment is a broad concept. It is similar to digital wallets but the only advantage is that it can keep the cash balance.

Digital Wallet Trends for 2022 Financial technologies such as cryptocurrency, IoT, NFC, and AI are the ones that will pave the success of e-wallets in the upcoming years. The realization of AI-powered e-wallets that will automate routine transactions will ease out our day-to-day payment activities.

Similarly, the digital wallet trends for 2021 include e-wallets capable of making payment via NFC (Near Field Communication) while keeping the financial data secure through blockchain technology. There are endless possibilities for implementing innovative technologies in the payment industry.

Challenges with Ewallets Though the future of digital wallets seems very bright, there are a lot of challenges fintech businesses face while introducing any type of E-wallets to the market. Almost all of the E-wallets issues in 2021 can be ratified with the appropriate use of RegTech and other technologies. Here are some of the

1. Regulatory Compliances Where there is money, there will be strict compliances and the fintech businesses need to abide by all the legal regulations. The compliances include both financial and consumer-based regulations.

2. Fraud Risk The risk of fraud is one of the prime reasons why most customers may avoid adopting E-wallets in 2021. Mobile payments and digital wallets appear like a huge unknown risk of hacking, data theft/leak, vulnerabilities, and malware.

The only way out of this issue is to go with an e-wallet development company that provides GDPR compliant e-wallets. Also, improvising customer onboarding KYC with blockchain technology will also be a better approach to prevent fraud.

3. Customer Mindset Many customers still believe that there is no additional value in using e-wallets. The reason is, they are still not informed of the perks of using e-wallets over traditional payment methods such as cash or cards. Pinging them with the latest offers associated with payments to particular merchants could be one of the ways to create awareness among them.

4. Lack of Trust You Gov carried out a research that states that almost 43% of the mobile users have trust issues with all the three types of E-wallets, and 38% are afraid that if the phone gets lost, they will not be able to make a payment or someone might steal their money. A survey by Auriemma found that consumers are reluctant to recommend the mobile wallet they are using to their friends and family.

Conclusion Now when you see the bright future of all three types of E-wallets, it’s time to move to action and bring your financial technology business to life. The Nimble AppGenie team would be happy to offer its services to help you achieve your goal. We are well versed in Ewallet app development and have the appropriate experience. Our experts can guide you through all

the challenges occurring while developing your Ewallets. We will be your best choice for technology services in the financial domain.