Cashless payments have made an escalation since the pandemic, which made a huge impact on how we deal with our money and personal finances. On a day-to-day basis we started using digital wallets as a convenient method of payment. The reports published by The World Bank’s Global Findex Data in 2019 suggest that approximately 50 percent of world’s population have had hands over digital wallets to either send or receive money. Which is 10 per cent of rapid growth since 2019.
An increasing number of people have held on to using digital wallets for their transactions. Yet, it is essential to understand the difference between digital wallets from traditional bank accounts (net banking). This article will give you a run down through the aspects like, what digital wallet is, is it a good time to change to digital wallets, differences, and benefits you will be able to get once changed.
What is a Digital Wallet?
A digital wallet is like a virtual pocket on your smartphone where you can keep your credit cards, debit cards, passwords, electronic tickets, gift cards, and ID cards. Examples of digital wallets are PayPal, Apple Wallet, and Google Wallet. You can use the one that comes with your phone or get other digital wallet apps.
To put it simply, this is a method of payment through a mobile app which allows customers to either make payments or receive them. This method is proven to be the most secure and easiest method of all payments.
Many of these apps offer similar features, such as sending money to friends and having special credit cards. They also let you keep money in the app. It is very common in South Asian countries like India to use terms like Payment App instead of Digital Wallet since used interchangeably.
Is it a good move to change from a Bank account to a Digital Wallet?
Deciding whether to switch from a bank account to a digital wallet depends on what you like and need. Here are some things to consider:
- Convenience: Digital wallets are easy to use and let you make payments quickly. You can also keep things like loyalty cards and coupons in them.
- Security: Both digital wallets and bank accounts are safe for your money. Digital wallets might have extra security like two-factor authentication.
- Features: Digital wallets often have more things you can do, like sending money globally, paying bills, and investing. Bank accounts mainly help you access your money and make payments.
- Fees: Some digital wallets charge fees for certain actions, like sending money internationally. Bank accounts also have fees, such as monthly maintenance fees. For cost-saving strategies, explore our detailed guide on the cheapest way to transfer money from the UK to India.
If you want a simple and secure way to pay and manage your money, a digital wallet might be good. But if you need more banking features like investing or loans, a bank account could be better.
How advantageous is Digital Wallet compared to Net Banking?
| Advantages | Digital Wallet | Disadvantages | Digital Wallet |
| Convenience | Digital wallets allow you to make payments quickly and easily, without having to carry cash or cards. You can also use digital wallets to store loyalty cards, coupons, and tickets. | Limited Acceptance | Digital wallets are not yet accepted everywhere. Some physical stores and online merchants may not accept digital payments. |
| Time- Saving | Digital wallets can save you time by storing your payment information and allowing you to make payments with just a few taps or clicks. | Possible Transactional Failure | Digital wallet transactions can sometimes fail due to technical glitches or server maintenance. |
| Cost-effective | Some digital wallets offer cashback and discounts on transactions, which can save you money in the long run. | Additional Charges | Some digital wallets may charge fees for certain transactions, such as loading money into the wallet or transferring funds to a bank account. |
| Accessibility | Digital wallets are accessible to anyone with a smartphone. | Smartphone Compatibility | Digital wallets require a smartphone to use. They may also have compatibility issues with certain mobile operating systems. |
| Record Keeping | Digital wallets offer real-time transaction updates and digital receipts, which can help you track your expenses. | Regular Maintenance | Digital wallets need to be regularly updated to ensure security and functionality. |
In addition to the benefits listed above, digital wallets also offer a variety of other features, a few of them are peer-to-peer payments, bill paying, and mobile ticketing.
Overall, digital wallets offer several advantages over traditional payment methods. They are convenient, time saving, and can save you money. However, it is important to be aware of the limitations of digital wallets, such as limited acceptance and the possibility of transaction failures.
If you are considering using a digital wallet, it is important to do your research and choose a wallet that is reputable and secure. You should also consider the features that are important to you, such as the ability to send and receive money internationally, pay bills, and invest money.
