According to Juniper Research Report, it is estimated that over 60% of the global population will be using a Digital Wallet in 2026 because digitization will accelerate the transition towards contactless payments.
This article will provide you with detailed guidelines that show you step-by-step how to develop a digital wallet in a wide range and what you should pay attention to.
What is a Digital Wallet App?
Digital wallet apps are a way to pay online on mobile devices. You don't need to enter any card details or carry physical cards because they store virtual versions of both debit and credit cards. The digital wallet app allows for contactless payments, online shopping, and in-store purchases via mobile devices using only the "tap to pay" function.
The software also stores and saves all digital membership cards and tickets, as well as boarding passes and gift cards.
How does a Digital Wallet Work?
Enter your details after downloading the app. This includes credit card information, debit card info, bank account information, email address, and phone number. You can pay for purchases using the digital wallet after verifying your information.
A smartphone or other smart device is required to be placed near the card reader of a retailer's POS. After selecting the mode of payment, (credit/debit), you must follow the instructions on the terminal. The amount will be transferred once the payment has been authorized.
The technology behind a digital wallet is what makes it work. These are the financial technologies behind digital wallets.
NFC (Near Field Communication)
Through electromagnetic fields, two NFC-enabled devices (i.e., the smartphone and credit card terminal) can communicate. Contactless payments are made via digital wallets such as Apple Pay and Google Pay.
MST (Magnetic Secure Transmitter)
MST connects a smartphone with a merchant's payment device using magnetic signals, similar to magnetic stripe cards.
This mimics the magnetic connections created by swiping an ordinary credit card. They work on a wider range of credit terminals. Samsung Pay uses a proprietary version of this technology.
QR Codes (Quick Response Codes)
The QR code is a pattern of pixels that contain information about the merchant and transactional details. They also carry commands (payment links, payment confirmations) that are related to transactions.
Merchants can generate QR codes to promote their stores or for a specific amount or variable amount. The customer scans it with the camera on their smartphone and transfers the payment.
Beacon
Beacons accept payments via Bluetooth and smartphones that support Bluetooth 4.0. It also uses BLE transmitters for online and offline payments.
PowaTag and PayMarket LabWerk are just a few of the mobile payment solutions that use beacon technology.
Soundwave Based Payment
Soundwave is an NFC-based digital payments mode that uses sound to complete transactions. This software can easily be added to any app that facilitates electronic payments.
Digital Wallets Types
Here is a list of different digital wallets that are used to finance management software in businesses.
Closed wallet
Customers can be provided with a wallet by a company selling products/services. The wallet allows users to store money and only make payments to the wallet issuer.
Here, you can store fund processing such as refunds, cancellations, and returns. Closed wallets include Amazon Pay and Target.
Semi-closed wallet
Users can transact with merchants or locations with a connection to the issuer. Wallets can be used for both online and offline transactions, despite the limited coverage.
Open wallet
Open wallets are provided by digital banking platforms, financial institutions, and neobanks that have formed partnerships with each other. Users can perform transactions that are allowed in the semi-closed wallet, withdraw money from ATMs and transfer funds to other banks.
PayPal is the most popular open wallet. PayPal Debit Mastercard allows ATM withdrawals within the US.
Crypto Wallet
Crypto wallets allow users to store, send and accept cryptocurrencies such as Bitcoin and Ethereum. Users can also spend their cryptocurrency at merchants such as Microsoft, Starbucks, and Home Depot, which accept it.
To ensure privacy, the cryptocurrency coins are kept in a ledger online called a Blockchain. The private key in the crypto wallet can be used to access this ledger.
IoT Wallet
Wearable devices, appliances (smart assistants), and other objects, such as cars with wireless connectivity, can be used to make payments.
As users already have smart devices which allow them to be connected online, they don't need to use a separate device to access their digital wallet. A smart fridge can order groceries using an IoT wallet.
But, today, interest in cryptocurrency is increasing, and it's important to mention cryptocurrency wallets.
These wallets are based on an encrypted system that allows them to store and send cryptocurrencies like Bitcoin and Ethereum. Crypto wallets are primarily used to manage cryptocurrency resources and communicate with the blockchain.
How to Create a Digital Wallet App? Step by Step
Step 1: Discovery Phase
Answer the questions you need to answer about your wallet, such as what it will be focused on (payments or rewards for usage) and how many users the wallet is intended to serve.
It is important that you conduct research at this stage to determine your audience's preferences and needs and to evaluate your competitors. This will help you identify the unique features of your application.
Step 2: Select Your Tech Stack And Platform
You will need to choose the platform that you want for your eWallet. Choose between a native app, which is, i.e.; You can choose between a native application that's compatible with just one mobile operating system, iOS or Android. Or you can go for a cross-platform app, which is compatible across multiple platforms. One that is based on a single code base but can be used with multiple operating systems and the Internet.
It is also important to select the right development team and tech stack for your project.
Step 3: UX/UI Design
Focus on visualizing your product with mock-ups. Then, hand over the prototype to the specialists who will begin working on the user interface and experience.
Your digital wallet should have a consistent and clear style and be easy to use.
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Step 4: Develop a Minimum Viable Product (MVP)
It's not necessary to start with all of the functionalities. Start with the minimum viable products, which is the basic functionality such as adding payment methods and making transactions. Share this basic version of your product with your target market and get their feedback.
Step 5: Test the Software (QA)
Digital wallet apps are not complete without quality assurance. As a client, your software should not only be well-coded, attractively designed, and popular with your target audience but also free of bugs and errors.
You can choose between automatic or manual testing to make sure that your digital wallet will be stable and reliable.
Launch and ]Maintain your Digital Wallet App
After your app has been released, you should continue to update and improve it to keep it current and useful to the users.
What are the Features of a Digital Wallet Application?
You need to be determined to create a digital wallet application.
Basic Features:
- User Registration: These processes should be simple, with multiple options for registration and login, including phone number, email, and social media.
- Security: To protect payment information in a digital wallet, it should be equipped with strong security measures.
- Integration: Card and Bank Account - With the help of this process, you can transfer funds from the account into the eWallet.
- Transactions and Payments: A digital wallet should be able to support various payment methods, such as bank transfers and contactless payments. It can also accept QR codes, NFC, and biometrics.
- Transaction History: Users should be able to see where they spent their money, and mobile wallets should have detailed transaction histories.
- Bill Payment: This feature will remind you of your upcoming bills via push notifications.
- Chatbot: Customer service is an important feature, and the chatbot can be a simple alternative for answering frequently asked questions.
Your digital wallet must have these features.
Advanced Features:
- Automated payments: This feature allows users to schedule payments in advance so that they don't forget them.
- Budgeting Tool: With this tool, users can better plan and track their budgets.
- Discounts and Rewards: Users can get additional discounts, loyalty cards, or rebates by using the application.
Digital Wallet Application Benefits
Both for the person who is building this application and for users, e-wallets offer many positives. Building a digital wallet has many benefits.
- Convenience: Virtual wallets enable users to manage their finances and make payments electronically from their smartphones. They do not need to carry physical credit cards.
- Better Budget Planning: E-wallets track spending habits and, thanks to generated reports, can suggest the maximum amount that should be allocated to certain categories.
- Security: Digital wallets are a secure way to conduct transactions online because they use security measures such as encryption, multi factor Authentication, and biometric security (such as fingerprint scanning or facial recognition) to protect the user's data.
- Improved Data Analysis: Mobile Wallet applications collect more data about user behavior and preferences, which is useful for businesses that want to improve their financial products and service.
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Simplified Payment Process: The e-wallet offers new options for online payments. For example, QR codes or the ability to split bills.
- Better control of payments- You can access all the information about your transactions in one place. You can then better manage your finances by utilizing the information available..
- Reduction of manual work- Charging the wrong amount on the card reader could lead to a bad experience and revenue losses. Digital payments allow you to avoid such problems by ensuring that payments are error-free. You can also set up recurring payments easily and not worry about charging customers each month.
- Ease-of-access- Digital wallets offer a high level of convenience and payment gateways that meet modern security and speed requirements. It is also easier to avoid the tedious process of entering card details every time you make a payment.
- Improved Customer Experience- Digital wallets will help you to serve your customers more quickly by eliminating the frustration of long queues and fiddling with cards. These improvements will make your customers' experience better.
- Real-time data- You may use digital wallets in order to access real-time customer preferences and other information. You can segment your market better if you have access to this data.
Read More: Why are blockchain and cryptocurrency shaping up for the future?
What is the Security of eWallets?
Digital wallets use strong security measures in order to protect payment information. They can therefore be used as a safe way to conduct online transactions.
Three key elements influence the security of a digital wallet. This type of app must have passwords, P2PE, tokenization, and multifactor Authentication.
- Passwords: Passwords are the most basic form of protection for any digital application. It is important that the user does not create a simple or short password, as this will lower the level of security. The wallet will be more secure if the application rejects passwords that are easy to crack.
- Point-to-point encryption (P2PE): It is a security modern technology that protects transactions from the beginning until the end. The encryption process starts when the phone is placed over the terminal. It continues until the transaction has been completed. This level of security is one of the most important features of a digital wallet.
- Tokenization: Is a secure data encryption system. The payment information is converted into a random series of symbols called a token.
- Multifactor Authentication: Is an extra layer of security beyond just entering a username and password. This method secures an account using a minimum of two authentication methods that are unrelated.
What Are The Best Digital Wallet Apps?
Apple Pay
Apple Pay is an Apple device-based contactless payment system. Apple Pay was created to get consumers off of physical wallets. You can pay with your Apple Watch or iPhone instead of using a physical card. Face ID or Apple Wallet can confirm the transaction.
Google Pay
Google Pay, a smartphone payment system built into Android devices, connects with the primary account number of the device.
Google Pay accepts payments using NFC technology. Users can pay by fingerprint or password. Card information is encrypted.
Samsung Pay
Samsung Pay is compatible with both MST (MST-based) and NFC (Near Field Communication). This allows you to make digital and contactless payments via Samsung devices. Samsung Pay works with magnetic stripe terminals and offers a rewards system that users can use at any time.
Google Wallet
Google Wallet allows you to send funds to friends and family via your mobile device. It can be done directly through a debit card linked bank account or from the balance.
The money transfer is done in a few seconds using an email or a phone number. To access funds, you will need a Google Payments PIN.
PayPal
PayPal is an online payment platform that facilitates payments between parties via money transfers. PayPal users can send and receive money from others.
How Much Does It Cost To Create An Electronic Wallet Application?
The costs of developing an app for a digital wallet can vary widely depending on a number of factors. We have identified those factors that have the biggest impact on the price of an app.
- Application complexity
- Type of platform for which the application will be developed (we distinguish Android, iOS, and cross-platform).
- Number of features that must be included in the basic and advanced versions
- The location of the team and the hourly rate depends on the skills and experience of the programmers.
How Can Digital Wallets Be Used To Manage Your Business Finances?
Digital wallets are a convenient and safe way to handle money. What about business? Can businesses also enjoy the benefits of digital wallets? Find out.
Here are some ways that digital wallets can help businesses manage their finances:
It's Simple And Delivers A Better User Experience
Contactless payment through QR codes is a feasible way to improve customer experience.
According to Juniper Research's estimates, the value of international QR code payments in the first quarter of 2022 was $2.4 trillion. The amount of QR code payments is expected to grow by 250% over the next four-year period and reach $3 trillion in 2025.
Even after the COVID-19 epidemic, the number of smartphone users who are willing to use digital technology as a convenient powerful tool is growing exponentially.
QR code technology can be beneficial to your business on several levels, including:
- Secure transactions
- Faster than any other payment method
- Improves customer experience
- Display and generate easy-to-understand information
- Human error is less likely
No matter what your service is, QR codes can work for your business, whether it's small or large.
As a business, you need to be cautious when selecting the type of QR code. QR codes offer a variety of benefits. You want to ensure that your customers make payments without any delays or mistakes. This can affect their overall customer satisfaction.
It's better to use a dynamic QR generator than a static one, as the latter is editable and trackable. (User data, number of scans, locations, etc.). This type of QR code facilitates predictive analytics. You can include multiple QR codes to control payment.
Collaboration With Digital Wallet Applications
Digital wallets have opened up new financial management avenues for businesses. It has become difficult to select a digital payment provider when the market is dominated by names like Google Pay and PayPal.
You must offer your customers an easy and secure payment system. The digital payment system you choose must also meet your business requirements.
Imagine that the wallets you use don't offer the features you need. Depending on your business's unique needs, you can create custom digital wallets such as Walmart Pay or Starbucks mobile app.
Consider factors like these when collaborating with digital wallet applications
- Service agreements and fees
- The Integration of Technology
- Customer support
- Security concerns
Choose The Right Terminal For Payment Processing
Businesses that want to provide seamless experiences for their customers have started using digital wallets. The easiest way to accept and support digital wallets is with a fully integrated terminal. This is a one-stop solution that combines the POS system with a card reader into a single device.
This terminal eliminates the need for multiple displays, scanners, and cash registers. It can also be easily integrated with the digital software and apps that you use regularly, making financial management easier for businesses. All these factors will result in a better customer experience, which may lead to increased conversions and loyalty.
Offer Incentives To Customers
Customers can use digital wallets as a form of discount cards. These tactics are important in the overall strategy of customer retention.
Shell's Fuel Rewards Program, for example, offers discounts to customers who purchase fuel at petrol stations. Shell offers discounts on fuel to regular customers. All these features are available on their online platform.
75% of consumers are more likely to choose companies that offer good rewards. When you design a rewards program like Shell's, you will build a loyal following and help your customers form a bond with the brand.
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Conclusion
Especially Generation Z people are increasingly using mobile apps to make payments for their financial transactions. It is the simplest way to pay. E-wallets will be the way of the future, as they allow secure contactless payments in just a few moments.
You probably already know from our article that developing a mobile wallet can be a difficult task. The process involves several stages that take you from a simple idea to a working prototype with real users.
The current market suggests that mobile wallets are set to continue growing, so it is now the right time to implement and reap the benefits of your idea.
If you want ewallet app development you can contact cisin.
We have a team of highly motivated and experienced minds. Each application that we develop is designed well, tested thoroughly, and ready for the market.
Our Discovery Phase service will ensure that your idea is validated by engineers who are highly qualified and equipped with the latest technology.
