A Digital Wallet is a software application for making monetary transactions electronically. The application allows you to receive, send, transfer and store digital entities, thereby simulating physical monetary transactions.
The application acts as a virtual wallet wherein people can store their currency and use it as a convenient payment device. The popularity of Digital Wallets and their usage has grown multi-fold over past few years, with the increased focus on digital transactions.
The widespread availability of smart phones, data connectivity, convenience and adaptability has contributed significantly to the growth of Digital Wallets.
As a user, there is a plethora of applications that one can choose from. In practice, people use multiple digital wallets, primarily to cater to compatibility across disparate payment platforms. The major advantages of using Digital Wallets are :
· Convenience – of not carrying physical currency/ credit cards on person.
· Risk Avoidance of theft or loss due to non-existence of any physical entity.
· Accessibility to finances anywhere/ anytime.
· Ease of Usage.
· Monitoring and Tracking of all spends and transactions.
Despite these advantages, there is a flip side to Digital wallets, the main disadvantages being :
· Risk of unauthorized access (by someone who gets hold of your credentials).
· Risk of Hacking regardless of data encryption and security measures by the wallet providers.
· Exploitation of vulnerabilities to gain access, especially on public Wi-Fi networks.
· Financial loss due to fraudulent transactions on one’s wallet.
· Risk of security breach at the Wallet provider’s end.
· Non- acceptance with many merchants/ vendors due to diversity of payment platforms.
Even with the existence of these disadvantages, Digital Wallets score high in terms of technology headway and are gaining exponentially in usage and popularity.
A huge section of the population is hesitant and averse to adopt Digital Wallets with apprehensions of Hacking, Security breach, password compromise leading to their financial loss.
Having listed all these factors, the benefits of usage still outweigh the negatives. However, in order to mitigate the disadvantages, users need to adhere to the following Dos and Don’ts :
· Ensure implementation of strong passwords and prevent compromise of the same by non-sharing the passwords and not storing at an easily accessible location.
· Be sensitive to Phishing and malware scams. There are no free lotteries and unknown inheritances. Look at any freebie with a high level of suspicion.
· Be vigilant to Social engineering attacks. No genuine customer service agent would ask for your personal details on phone.
· Passwords, CVVs, OTPs are like your private parts – not meant for display/ sharing with anyone.
· Enable two-factor authentication wherever possible, to provide an additional layer of security.
To summarise, Digital Wallets are here to stay and possibly to replace the conventional wallets.
With the ability to emulate physical monetary transactions and flexibility of usage across time/ location, these applications are an asset and complement today’s changing lifestyle.
However, users need to be aware of the potential threats and mitigations thereof.
The author is a technocrat with expertise in Cyber Law and Digital Forensics. He is currently acting as consulting advisor/ mentor to several startups
DISCLAIMER: The views and opinions expressed in this article are the personal opinions of the author.
The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.
