What is a digital wallet? Digital wallets are simply payment apps that allow you to store your bank cards, debit cards and credit cards. You can then use the app to pay on the go by tapping your phone against a card terminal at checkout. Digital wallets are also known as mobile wallets, online wallets or Internet bank accounts. Digital wallets have been around for a few years but have we been using them or abusing them? While it can help you keep track of your spending and then write debit note and credit note easily it can also lead to overspending and compulsive habits. Click here to answer more.
To answer this, let us understand the advantages and disadvantages of digital wallets.
Advantages:
- Convenient
One of the main advantages of digital wallets is that they can be used in any country where smartphones are available and where the provider of the wallet has an agreement with local banks to process transactions that go through their system. This means that you can use your digital wallet anywhere you can use a smartphone!
- Save time
With a digital wallet, you no longer need to carry cash or credit/debit/prepaid cards when you go shopping or travelling. You simply use your smartphone as your payment method, scanning it at a checkout terminal to make a successful payment! This reduces the time taken at shops and makes paying for things faster and easier than before. Digital wallets help to keep track of spending
- Secure
Digital wallets allow for two-factor authentication for higher security and also feature transaction monitoring and alerts for suspicious activity. Because virtual wallets are stored on a phone or other device, they are less likely to get lost or stolen than a physical wallet. An e-wallet can be locked with passwords and/or biometrics, making it more secure than even a locked physical wallet. Another benefit of digital wallets is that they’re more secure than cash transactions. This is especially helpful in countries where counterfeit money is common.
Disadvantages
- Acceptability
Not every business accepts digital wallets yet. Most of them do, but not necessarily all of them. And even if a business does take digital wallets, they may not take every kind. That means you may have to look for an alternative solution, like paying in cash.
- Risky for people with poor budgeting habits
Digital wallets are convenient and fast, but if you have a history of overspending, you should think about whether it’s better to have control of your money or have access to your money. If you are prone to overspending then maybe a digital wallet isn’t the best choice for you.
- Limits
Has it ever happened to you that your gpay limit per day stopped you from making a purchase? Well, this is a common problem for digital wallet users whether you use gpay or Paytm. While generally digital wallets give you seamless access to your account there are generally daily spending limits on different payment wallets.