The idea of digital currency has revolutionized consumer behavior in several ways. It has made purchasing more convenient and secure, for digital money is not easy to steal.
This being a competitive market allows users to choose from the ones with the best offers like cash back and e gifts. Business owners encourage customers to pay online with incentives like discounts and paybacks. With inbuilt notifications, reminders to pay bills keep people from ending up with late bill charges.
Advantages of the Digital Wallet:
Lower Costs: Employing the use of digital wallets removes the need for intermediaries, in a variety of forms. Purchases in-store may no longer require a cashier because the purchasing process becomes as simple as a tap or scan of a mobile device. Applications like Square can replace expensive POS (point of sale) systems that will reduce transaction costs for the business.
Competitive Advantage: Digital wallet applications provide a more convenient transaction processing method for customers, giving businesses that employ this technology a competitive edge in the market. It redefines the user experience of paying and incorporates a novelty aspect to each purchase.
Modern: Traditional cash-only businesses, such as craft fairs and flea markets, can now accept debit and credit cards. This opens up an entirely new aspect to payment methods in large markets, introducing many business opportunities and greater potential revenue.
Convenience: Users are able to get through a purchase in mere seconds with a simple tap or scan of their mobile device. The experience of purchasing items becomes quicker and easier - leading to a greater sense of satisfaction. Furthermore, with faster transactions, checkout lines within stores become much shorter.
Disadvantages of the Digital Wallet:
Investment: The initial monetary investment for building a functional digital wallet application is quite large. It requires the initial development of the software as well as the continual maintenance, updates, and fixes associated with it. Upon acquiring software, the business would also need to install the corresponding hardware in its stores, which leads to a further increase in costs.
Support Technology: There are few supporting technologies to choose from at the moment, with NFC terminals and phone readers being the most prevalent. In the case of digital wallets, they can only function with a corresponding hardware device for each application. NFC terminals and specialize scanners are the only devices created at the moment that will support the processing of digital wallet payments; thus, it is very limited because the technology is still new.
System Outages: Information for digital wallets are stored on the cloud of business servers; therefore, the risk of a system malfunction or shut down is always present. As a result, businesses will not be able to process payments or they will become increasingly slow due to high traffic in the servers.
Security: Companies must ensure that their customers' information is encrypted and well protected. One of the biggest concerns of adopting a digital wallet application is "will my information be safe"? This is the hurdle that companies must face and as a result, must develop security systems that are as safe and full proof as possible to avoid potential security issues.