What is the difference between m-wallet and e-wallet?
Gone are the days when payment options were limited to the use of cash, cheques, and bank cards. Digital payments are on the rise as the use of cash is decreasing worldwide. More and more consumers are switching from using banknotes to various kinds of cashless payment systems such as cards, digital wallets, and mobile wallets.
While it is easy to identify the differences between cards, the difference between digital wallets and mobile wallets is often a source of confusion. This article will teach you to distinguish them so you can choose the best one for your needs.
What is a Digital Wallet?
A digital wallet is an electronic tool that is basically used to store payment information. It is also referred to as an electronic wallet or e-wallet. You can use an e-wallet to store information about your debit, credit, or loyalty cards. It is a very popular peer-to-peer (P2P) method of payment. Examples of digital wallets are PayPal and Cash App.
An e-wallet is not a bank account. It is a type of pre-paid account that you link to your bank account through your bank card. Thus, a digital wallet helps to reduce the need to use a physical card for your transactions. It holds the details of your cards so that you can use them to pay at point-of-sale (POS) terminals or online stores without physically handling them.
Digital wallets are apps that come with a lot of features. Different digital wallets have different capabilities. Depending on the function it was designed to perform, a digital wallet may be used to store card payment details, hold government-issued currencies (such as EUR, GBP, USD, and central bank digital currencies), store cryptocurrency keys, and make electronic payments to merchants. It could be a mobile app on your smartphone or a desktop application on your personal computer.
How Does an e-Wallet Work?
An e-wallet saves your card details so that you can make purchases online without holding the card. The first step toward using an e-wallet is to download it. Most e-wallets can be downloaded on the website of the provider, or on the Google Play and App Store.
When you have downloaded the e-wallet that you want to use, the next step is to link your physical card with it. You will have to type or scan the information on your card in the e-wallet and use a one-time password (OTP) that will be sent to your mobile phone to authenticate or confirm the connection. This makes the digital wallet able to transfer your payment details from your bank to the vendor during your transactions.
Next, you will follow the steps in the app to complete your account registration. Some e-wallets will require you to verify your identity. This is usually a simple process of sending your national or international passport, or any other acceptable identity document, to the service provider. This step is necessary to follow the Know Your Customer (KYC) rule and other regulations. In this case, your account will be set up for payments after successful verification.
With your e-wallet, you can shop at e-commerce stores, make payments to retailers in person, and transfer money to anyone. When shopping online, you can choose to make payments using your e-wallet if the merchant accepts it as a payment method. Likewise, during in-person shopping, you can use your digital wallet for point-of-sale checkout if supported. You can also use it to make payments for bills and other subscription services.
Types of e-Wallets on the Market
Despite the numerous digital wallets on the market, they can all be classified into three types: open, semi-closed, and closed e-wallets. The openness of digital, mobile, and e-wallets generally depends on whether they can be accepted by just about any store or some particular retailer outlet.
- Open e-Wallets: These digital wallets are accepted at most retail stores. Open e-wallets enable contactless in-store payments, online purchases, money transfers, and cashback. Some allow ATM withdrawals. They can be used for a wide range of transactions. They are usually provided by FinTech companies, banks and their partner institutions, and electronic money institutions.
- Semi-closed e-Wallets: When an e-wallet allows you to make transactions within a certain group of retailers and allows you to make both online and offline payments, it is regarded as semi-closed. Its use is based on an agreement between the parties that accept it as a payment method.
- Closed e-Wallets: Closed digital wallets are usually issued by retailers or companies that want to use them for transactions with only their customers. They use them to simplify and store records of payments, cancellations, refunds, and returns. A popular example of a closed e-wallet is Amazon Pay.
The Best e-Wallets to Use
There are many good e-wallets on the market presently. However, when it comes to making fast, safe, and reliable payments, we recommend the top digital wallets that we have listed below. They include the best Bitcoin digital wallets and the most reliable apps for making different kinds of transactions in fiat money.
PayPal
PayPal can be regarded as an all-in-one digital wallet. PayPal is an e-wallet that allows you to send and receive fiat money to and from friends and family, pay bills, and track your payments. It also allows you to buy, sell, hold, and transfer Bitcoin and other cryptocurrencies. In addition, PayPal users can earn between 2% and 3% cashback on their purchases at millions of merchants.
Venmo
Over 83 million people use Venmo to make and receive fast payments. It is a digital wallet that you can use to split the rent, utilities, groceries, and other payments with your friends. It is also crypto-friendly. You can get up to 3% cashback for using the Venmo Credit Card for cryptocurrency transactions. The Venmo card comes with a personalised QR code for easy payments.
Zelle
You can use Zelle for contactless payments. It helps businesses and individuals carry out smart transactions. It supports many other payment methods, including Visa, Mastercard, Apple Pay, and Google Pay. Zelle is similar to Venmo in many aspects, but they are different digital wallets.
Cash App
Cash App is a digital wallet and financial platform for sending and receiving money. Its app and card can be used for different kinds of online transactions. Moreover, its support for contactless payments makes it great for checking out in physical stores.
Capitalist
Capitalist offers a free multi-currency wallet that you can use to make and receive mass payments. It is suitable for businesses and individuals. It supports money transfers to and from banks, cards, and other payment systems.
What are the Disadvantages of e-wallets?
Despite their many advantages, which include user convenience, financial security, and low-cost transactions, e-wallets also come with some disadvantages. These are the cons of digital wallets:
- Limited merchants: Not many stores accept e-wallets as a payment method. Besides, the particular e-wallet that you use can limit your ability to pay using it if there is little or no acceptance of it in your location.
- Lack of support: Most payments made using digital wallets at physical stores rely on contactless-enabled terminals and specialised QR code scanners. How many stores can provide these facilities compared to the number of retail outlets in your location? Most likely, only a few. This means that there is limited support for this kind of payment offline.
- Fees: Yes, we cannot fail to mention that e-wallets do come with some fees. Many of them allow you to open an account for free, but you should expect to pay some fees for certain kinds of transactions, such as currency exchange, ATM withdrawals at home or abroad, and monthly or yearly account maintenance fees.
What is a Mobile Wallet?
An electronic wallet that allows you to store your card details and also make payments using your smartphone is called a mobile wallet, or m-wallet. In other words, m-Wallets are used to make mobile payments. Popular examples of mobile wallets are Apple Pay, Google Pay, and Samsung Pay. They use technological innovations to keep your transactions convenient, contactless, safe, and secure. Similar to digital wallets, you can earn rewards for using mobile wallets, but not all of them have this feature.
What is a Mobile Payment?
Mobile payment is a transaction done using any kind of mobile device, thereby offering you many options. Examples of devices that support mobile payments include, but are not limited to, dedicated smartphones and wearable wristwatches.
A mobile payment could be any of the following and more:
- an expense for an item purchased in a retail or luxury store;
- funds transferred to family or friends;
- settlement of a debt or bill.
When it comes to mobile payments, the kind of transaction you need to make does not matter. The most important thing is that you are able to use a moveable electronic device to perform the transaction.
There are different technologies behind mobile payments. One of them is Near Field Communication (NFC), which makes it possible for two devices that have NFC chips to exchange encrypted payment information when they are brought close to each other. It is a wireless technology that is based on radio frequency identification (RFID) and is responsible for successful contactless payments at POS terminals. So, contactless mobile payments can only be made with NFC-dedicated smart devices, which refer to phones and other electronic wearables that were designed with NFC chips inside them.
Another technology for mobile payment is “Quick Response” (QR). It transfers payment information through QR codes or barcodes. For example, in some local stores and large retail outlets, to receive or make payments, you can scan a barcode using a dedicated app on your smartphone.
Are Mobile Wallets Safe?
Yes, mobile wallets are generally safe. Most of them use a process called “tokenization” to encrypt your account and card details so that merchants cannot read them. They also use two-factor authentication and 3D Secure technologies to safeguard your transactions.
Furthermore, mobile wallets require their users to set confidential passwords or PINS that they can use to access their accounts or complete their transactions. Some mobile wallets support the use of biometric security technologies such as fingerprinting and facial recognition.
Can You Use a Mobile Wallet at an ATM?
Many mobile wallets now offer cardless withdrawal options. Therefore, you can use your mobile wallet to get cash at an ATM if it supports this function. The technology commonly used to enable this kind of transaction is NFC. You tap your phone against the contactless symbol of the ATM, and the digital wallet on your phone will get to work so that you can make the transaction.
Where Can You Pay with Mobile Wallets?
You can use mobile wallets to make payments at retail stores that have contactless POS terminals or digital-payment-enabled devices. Many major shops are beginning to provide facilities for the acceptance of this kind of payment. Besides, you may find some stores that support QR code payments in your location.
What are the Best Credit Cards to Use with Mobile Wallets?
To earn rewards with mobile wallets, you need to know the most profitable options on the market. Below are two of the best credit cards that you can expect to get rewards from when you use them with mobile wallets. They are among the safest on the market.
Nexo
You can use the Nexo Wallet to get Mastercard cards for fiat and crypto payments. It allows you to add and withdraw funds whenever you like. It provides support for non-fungible token (NFT) lending, exchanges, and cryptocurrencies. With the Nexo card and digital wallet, you get access to Bitcoin, Ethereum, Litecoin, and other cryptocurrencies.
In terms of rewards, Nexo offers very high crypto interest rates, which are between 6% and 18%. It offers instant 2% cashback on all your purchases and is accepted by more than 40 million merchants around the world.
Neon
Neon offers a digital card and wallet that can take care of your day-to-day transactions. Its account and card payments are completely free of charge. It provides two-factor authentication for the security of your funds and payments. In addition, you can use your Neon wallet to freeze your card if you misplace it or discover a strange transaction on your account. Its 24/7 customer support by phone is also available to you.
Mobile Wallet vs Digital Wallet – What’s the Difference?
Mobile wallets and digital wallets have very similar functions in that they both store details of cards and allow their users to make cashless payments. Nevertheless, they are not exactly the same.
While there are some digital wallets that may not be used on mobile devices like smartphones and wearable smart devices, all mobile wallets are designed for use on them.
Therefore, a mobile wallet is a type of digital wallet that can be accessed and used only through a mobile app on a mobile device, while a digital wallet can work on many different types of platforms, including computers.
Role of Mobile Payments and Digital Wallets for Merchants
Digital wallets and m-wallets are ideal for merchants who sell online or have their own mobile apps. They allow them to easily accept payments from their customers and business associates as well as make refunds and other transactions. In that case, the e-commerce merchant must ensure that they accept online payments through safe methods.
When retailers offer their customers a variety of payment methods that include digital wallets, they encourage more patronage by simplifying the payment experience. Thus, the payment process becomes convenient for both the buyer and the seller, who will not have to take the risk of handling cash or cards.
On the other hand, traditional merchants who operate brick-and-mortar stores will find mobile payments profitable. They can accept contactless payments through mobile wallets like Google Pay and Apple Pay when they install POS terminals that support NFC.
Benefits of Digital and Mobile Wallets
Digital and mobile wallets provide many benefits to customers. You can expect a wide range of benefits as there are different kinds of them on the market. Nevertheless, the following are common gains to expect when you use an e-wallet or m-wallet:
- They store your cards so that you can have some free space in your pocket or physical wallet.
- They offer you easy access to your accounts and transaction details.
- They serve as a convenient platform for simplified online purchases; besides, mobile wallets allow you to “tap to pay” at point-of-sale terminals.
- They provide high safety and security through the use of PIN codes, passwords, tokenization, and 3D Secure technology.
FAQ
Probably, you already use it. If not, you should try to use mobile wallets for your payments. They offer a lot of benefits that range from convenient payments to safe and secure cashless transactions.
Not exactly. All mobile wallets can be said to be e-wallets because they are electronic payment apps that run on mobile devices like smartphones, but not all e-wallets are mobile wallets because some of them can be used on laptops.
The three types of mobile wallets are open, semi-closed, and closed m-wallets. The open mobile wallets can be used for any type of transaction and are not restricted to specific merchants. Semi-closed mobile wallets allow you to make payments to certain retail stores only. Closed mobile wallets are used for transactions only between the merchants that issued them and their respective customers.
The Bottom Line
The difference between e-wallets and m-wallets is that the latter can only be used on mobile phones and easily portable devices, while the former can be used on smartphones, tablets, laptops, and many other electronic devices. Mobile wallets are a category of digital wallets. Businesses should consider using NFC-enabled card terminals and digital wallets so that they can easily and securely accept and make payments to and from their customers and business collaborators.
