All you need to know about virtual wallets
Choosing the right cards to sit in your wallet is always a challenge. Rewards cards, membership cards, debit cards, credit cards — there’s so many to keep track of! If only there was a one-stop shop where you could store all your cards and have them in your hand at the touch of a button…
Well, now there is.
Virtual wallets condense all your physical cards into one electronic space. When you're using a virtual wallet during checkout, you no longer need to fumble with cash and cards, making the checkout process smoother and ensuring a seamless transfer of funds. By adding your cards into a virtual wallet, you don’t need to even have your wallet in your pocket or purse to make payments on the go; they’re possible, convenient, and popular with a virtual wallet. Virtual wallets are also a helpful way of keeping track of all your financial information together, merging the worlds of cash, debit and credit — even crypto.
When you're using a virtual wallet during checkout, you no longer need to fumble with cash and cards, making the checkout process smoother and ensuring a seamless transfer of funds.
A virtual wallet is an electronic wallet (or e-wallet) that lives on your mobile device or synced Smartwatch. By storing all of your payment-related information, it allows you to pay electronically — usually in the form of contactless payments or tap and go. Simple and straightforward, the virtual wallet sign up process connects your bank account to your wallet provider (usually Apple, Google, or Samsung) so it’s located in one app.
Virtual wallets, also known as mobile wallets, are designed to provide users easy and immediate access to their money even when they don’t have cash or physical cards on hand, the most familiar and well-known examples are Apple Pay and Google Pay. Virtual wallets are especially popular with Millenials and Gen Z, a demographic that’s largely transitioning away from traditional payment methods like cash and debit cards. Smartphones are ubiquitous. We take them everywhere we go, which means it’s easy to make a smart or mobile wallet part of your everyday routine. It’s easy to forget your wallet, but not as easy to forget your phone.
A virtual wallet login only takes minutes and is easy to set up as long as you have access to a bank account and a smartphone. Within a single mobile platform, you have access to all your financial information with a virtual wallet at your fingertips. Once that’s complete, you’re able to start making purchases and, when it comes time to pay, simply pull out your phone and make your payment. It’s easier than paying with cash or swiping a physical card — and there’s no chance of forgetting your card.
Some banks allow customers to use mobile wallets for free while others may charge a fee with each transaction. Virtual wallet fees vary depending on your bank and wallet app so it’s important to check your bank’s policy to see what, if anything, you'll be paying to use your virtual wallet. While this new wallet technology can be incredibly convenient, be aware of any hidden fees at certain places like grocery stores or banks.
To access a virtual wallet, you’ll need a virtual wallet app which can be downloaded with the purchase of a smartphone. Apple makes it easy to access and set up your wallet as it comes preinstalled on the phone; in order to use the service, simply activate your wallet when setting up a new smartphone. Depending on the app, there are multiple ways to activate virtual wallet technology — you may need to enter your email, PIN, or other basic personal identifiable information (PII) in order to verify your identity.
You might also be given a virtual wallet number to identify your wallet and account. This can help keep track of your wallet in case you ever lose access to your login information.
Three main types of virtual wallets are closed, semi-closed, and open. A closed wallet can only be used to make transactions with the wallet provider, whereas an open wallet can be used for virtually any transaction as well as withdrawing and transferring funds from a bank or ATM. With a semi-closed wallet, users can complete transactions only at certain locations and serve as a middle ground between closed and open wallets. Those that want to use their wallets within a more limited ecosystem might choose a closed wallet; someone wanting total freedom should opt for an open wallet.
Those considering activating a virtual wallet or wondering how to create a digital wallet should understand the differences between the types of mobile wallets so they can choose the product that best fits their needs. When setting up a mobile wallet account, it’s important to pay attention to the details of the terms and conditions associated with using the wallet. Different types of virtual wallet companies have different policies for use so read the fine print before creating an account. If you’re setting up a wallet through your bank, the bank should provide detailed information on how to activate and use the wallet.
Unlike a traditional card that you carry in your wallet, your virtual debit card exists in your virtual wallet and can be used much like its physical counterpart. In most cases, your virtual wallet debit card number has the same number as your physical card and some mobile wallets even display a digital image of your card so that it feels more like the real thing. With a virtual wallet debit card, your smartphone acts as your source of payment.
Some services impose a virtual wallet debit card limit, restricting the amount of transactions allowed over a specific time period or limiting the amount of money that can be withdrawn from an ATM in one transaction. Often, the same terms that apply to a physical debit card apply to virtual cards, as well. Before going the route of a virtual debit card, do your homework and evaluate each offering before choosing a card that matches your needs — if you’re not planning on using your mobile wallet much, card limits may not be an issue for you, but if you plan to make frequent transactions or withdrawals, you may want to go with a card with fewer restrictions.
Online banking platforms have become table stakes as more and more people realize the value of being able to access their finances from anywhere. We do everything online nowadays; banking is no exception. Instead of driving to the bank to make a deposit, we take a photo of the check from the bank’s mobile app of the check on your phone and it’s deposited into your bank account. You can manage your virtual wallet online, as well. By creating an online banking login, you’re able to access your banking information digitally. Your mobile banking login could be similar or identical to the information you use to access your virtual wallet, too. Mobile banking goes hand-in-hand with virtual wallets and is compatible with a number of different financial tools and services like applying for credit cards, loans, or purchasing cryptocurrency.
Virtual wallets are one of many services offered through online banking and companies have started to offer virtual credit cards and virtual debit cards to their customers. As the true standard in embedded finance, Bond provides flexibility in how you create your products and deliver them to customers. Companies can build and launch products seamlessly, taking advantage of Bond’s advanced APIs.
Names like PayPal, Venmo, Apple Pay and Google Pay are some of the most popular digital wallet companies to date. By providing mobile wallet services to customers, these companies pioneered having their customers make transactions via virtual wallet. This is increasingly useful as more and more people rely on their phones for everyday tasks. These evolving consumer behaviors have given rise to additional digital wallet companies.
Some virtual wallet services only offer closed wallets that are only compatible with the issuer's platform, like Amazon; others, such as Apple Pay, can be used more broadly. Digital wallets also skyrocketed in popularity over the course of the COVID-19 pandemic as more people sought contactless payment solutions to avoid spreading the virus. Even as the public health threat has abated, digital wallet companies have continued to thrive and it’s likely that, in a world that becomes more digitized by the day, they’ll enjoy even greater success in the future — pushing financial infrastructure boundaries.
If you’re interested in building virtual wallet technology or are looking to implement it into your own businesses, consider working with Bond. Contact us!