What is a mobile wallet?
A mobile wallet is a virtual wallet in the form of an app that is downloaded to a mobile device. It is used to store credit and debit cards and can also be linked to your bank account.
Once the app is installed and the payment methods have been verified it can be used to make contactless payments in-store and online. The popularity of these apps has risen sharply in recent years. One of the reasons for this is the convenience of not having to carry physical cash or a multitude of different cards.
There are a few different types of mobile wallets, they are:
Open Wallets – An open wallet is linked directly to a bank or other financial institution and allows the user to make payments from the funds stored in the wallet. Funds received into the wallet can be transferred to a bank account or accessed as cash.
Semi-Closed Wallets – A semi-closed wallet allows the user to make payments to partners and affiliates of the wallet provider. Funds can also be transferred to a bank account.
Closed Wallets – The wallets are specific to a single merchant (store card accounts) and can only be used for transactions with them. Funds cannot be transferred to a bank account or be taken out in cash.
How do they work?
Once the app has been downloaded the user will be asked to go through the registration process.
They will then be asked to add their payment details. This is normally the long card number, expiry date, security number and the name and address of the account holder. It can also be an account number and sort code.
Some mobile wallets also hold coupons, gift cards, loyalty cards etc.
The payment methods are usually represented by an icon or an image of a card. Often the cards can be named in the app to make them more easily identifiable. A selected card will be set as the default payment card or account and can be changed at any time.
When making a payment the NFC-enabled (Near Field Communication technology, is used for contactless payments from mobile devices) mobile device is held over the POS terminal and it triggers the payment process.
What are the benefits of having a mobile wallet?
There are a number of advantages to having a mobile wallet. There are many reasons for the soar in mobile payment adoption worldwide. The opportunity to have all of our payment solutions in one handy app appeals to most people. The benefits include:
Convenience – No need for cash and card heavy wallets as well as access to a number of other functions such as travel solutions, tickets and rewards all in one place.
Security – All of the information stored in a mobile wallet is encrypted. This lowers the chances of fraudulent payments being taken, unlike physical cards which can be stolen or copied.
Financial inclusion – Today an estimated 1.48 billion people worldwide still remain without a bank account. With many mobile wallets offering a virtual IBAN account more people have access to achievable, affordable financial services they would have previously been excluded from.