What is a Mobile Wallet App and How does it Work?

We say time’s have changed, but we feel it when our ways change. It’s the technology that has brought in pile of changes or specifically advancements in various aspects. It can be said technology has a great impact on our lifestyle. Well, without beating around bush, lets get straight to the advancements in the wallets we used once and we use today. Remember those traditional leather wallets we used or our dads used once to put in all their money factors at one place.

But now we no more find them sneaking in the pockets, and again technology came into the play. It replaced those traditional wallets to digital mobile wallet app and probably also changed the way we used wallets.

Let’s get a clear picture of the mobile wallets!

Understanding a mobile wallet

Basically, a mobile wallet isn’t actually what it sounds like. It’s beyond safe guarding your money, debit cards and credit cards. The digital wallet solutions acts like a payment gateway that lets you send money from your convenient source. The mobile wallets also popularly known as e-wallets are changing the ways people pay for things.

With people owning smartphones, there’s no more waiting in lines, collecting receipts. It is just about digital transactions and digital receipts. And with a decade of mobile wallets introduction in the industry it already has 29.5 million users across the globe with over 600 million successful transactions. It has become the most convenient ways of sending and receiving money across globe.

A mobile wallet protects your money, stores payment details, and is used to make payments. So, all in all, it plays the role of complete money handling digitally.
Besides, providing comfort, the technology also frightens with its dark side. In this case, the security of the money frets out the users. Since, the money is digitally handled by a third party source, the theft and cheating come out as the greatest concerns. But combating the theft, the mobile wallets are upgraded with the top-notch security every now and then.

The e-wallets are based on the encrypted software that processes through mobile wallets. They let you declutter your bank account and keep an accurate check on your money. They come with the two factor authentication and one-time password criteria, that ensures your money to be safe and secured.
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Categories of mobile wallets

If you think, you have a simple mobile wallet concept for everyone then, you should probably know what mobile wallets have got under their hood.
Generally, the mobile wallets are categorized into three main segments namely closed, semi-closed and open wallets. Let’s know each of them in brief.

● Closed wallets

These wallets are of one-way form, which means you can use the money only for the direct purchase from specific merchant. These wallets are linked to a merchant or private company. So, the money from these wallets can’t be transferred to your bank account. Few popular examples of closed wallets are Amazon Pay, Ola Pay etc.,

● Semi-closed wallets

These wallets are referred as semi-closed because they let you receive the money in your bank account, but won’t let you withdraw it as cash. These wallets can be used with multiple merchants until they are associated with a payment portal. Few popular examples of such e-wallets are Paytm, Mobikwik, Freecharge etc.,

● Open wallets

The open wallets aren’t confined like the closed and semi-closed wallets. These wallets are either issued by bank directly or by any third party. The money in this wallets can be used for transactions or withdraw to the account in cash. Examples of open wallets are PayPal, vodafone, M-Pesa etc.,

Working of mobile wallets

Now, that you know what mobile wallets are, and their types, also know how they work and make your life easier.
So, anyone interested in mobile wallets has a common question popping up on his/her mind about how can I use a mobile wallet or how do I send and receive money through mobile wallets. So, folks! Find your answer below.

Once the installing part of the mobile wallet app is done, you need to transfer your money in the bank to your e-wallet through net banking, debit/credit card. When you transfer the money to e-wallet, the money is sent to an escrow account by mobile wallet company ensuring they don’t exert complete authority on your money.
Now, whenever you make the transaction from mobile wallet, a message is sent to the merchant regarding the payment. Once, the payment is honored by the merchant, the money is transferred from the wallet to merchant’s bank account immediately.

In layman terms, to send money to a mobile wallet, it is first important to make sure the receiver has the same mobile wallet set up on their smartphone. If the receiver has already set it up, then you can proceed with providing the receiver’s mobile number, which is linked to their bank account to the wallet and send after verification of the otp or UPI pin (if any). The money is sent to the receiver’s wallet instantly.
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Benefits of using mobile wallets

There are a lot of advantages of using a mobile wallets. Let’s have a glance at few of them.

• Quick access to your money on the go.
• Easy and time-saving bill payments from your comfort space at one click.
• Pay and receive money anywhere, anytime.
• Your money is encrypted and password protected.
• They are user-friendly.
• Few e-wallets provide you cashbacks, offers and coupons upon transaction through their wallets.
• Lastly, you don’t need to carry the cash, your smartphone does it all.

Final words

So, we are in the era where smartphone can manage all aspects of your life and with money factor inclusion it makes life even more easier. Today a wallet is carried as an app in a smartphone instead of pockets, which means a mobile wallet is on demand and lives in every smartphone now. This leads to various wallet app development in the market. As this business is on the boom, if you are looking forward enter the business then all you need is a best mobile wallet app development company to proceed with and integrate comprehensive features to the digital payment solutions that make transactions easy for the user.

So, the bottom line is that, besides easing the transactional ways the mobile wallet has also broadened the scope of business in the industry.

Nikunj Gundaniya

Nikunj Gundaniya, Product manager Digipay.guru, one of the leading Digital wallet solutions, which provides mobile finance application development services. He is a visionary leader whose flamboyant management style has given profitable results for the company. He believes in the mantra of giving 100% to his work.