Over the past few years, the world has witnessed a tremendous shift in the technological industry and overall human usage of this technology. The Internet, which was started as a defense-related network of the US army, has today infiltrated in every household of the world. With smart devices and mobile phones in every pocket, each one of us is connected to the internet 24/7.
Evolution of the digital payment systems
The information and technology revolution has impacted every aspect of our society. We now use these technologies for making our lives faster, convenient and more comfortable. The financial sector of the world has also been affected by these innovative technologies. Digital wallets and mobile payments are two significant additions to the financial industry.
These are methods of payments that allow people to transfer funds without the physical involvement of money or cash. The initial concept of this cashless payment mechanism started only 10 years ago with an online payment system called PayPal. However, over a period of few years, these services enhanced very effectively, both in terms of quality and the number of users. Today there are a number of different companies and service providers which help users make payments through online accounts.
What are they all about? This technology is often referred to as digital wallet. It is a system of securely storing the payment data and information of the client and uses it for making online payments and purchases on client demand. One step ahead of this technology is the mobile payment. This involves making all payments using the capabilities of your smart device or mobile phones.
Impact on the users
These are cashless payment mechanisms that are powered by the internet and smart phone technologies. They have ahuge impact on our financial markets as well as the overall society. Below are some key advantages and disadvantages of these digital wallets and mobile payment systems:
1. This is a cheaper mechanism of payment as the requirement for intermediaries or services of financial institutions are reduced.
2. Online purchasing through digital and mobile wallets is much more secure, safe and convenient.
3. With fast and quick payment methods, the digital wallets and mobile payment systems have a competitive advantage over their traditional counterparts.
4. It reduces the dependence on cash and eliminates the need for carrying cash money all the time.
5. It is a modern and technologically advanced way of doing business transactions and individual financial dealings.
1. The risk of fraudulent stakeholders and cyber-crime activities cannot be ruled out in the online payment mechanisms. Security is one of the key concerns of digital wallet users.
2. There is a huge risk of the financial information being stolen and used for identity theft purposes.
3. Technological dependence on devices cannot be eliminated. If your mobile phone or device breaks down, loses battery or simply gets stolen, you cannot make urgent payments without a device.
4. Reliable infrastructure especially internet connection is necessary for proper working of the payment systems.
5. Last but not least, it is not suitable for the less technology savvy individuals.