- Pros Of Using eWallet
- 1. Can be a budgeting aid
- 2. Safer than Cash in Some Circumstances
- 3. Faster and More Convenient
- 4. May Have Rewards for Spending
- 5. It can be used at most retailers and online stores
- Cons Of Using e-Wallet
An electronic wallet, sometimes called a “digital wallet” or “e-Wallet,” is an electronic version of a payment card which is authorized to conduct transactions on your behalf. These wallets are usually on a mobile device, such as a smartphone, though desktops and laptops can hold an electronic as well.
With the wide range of mobile wallets available, almost everyone seems to using at least one. If you’re a traditionalist though, you may be disturbed by the idea of entrusting your cash to a third party. Consider the pros and cons of mobile wallets, before you make your decision.
There are several advantages and disadvantages of electronic wallets to examine if you’re thinking about embracing this technology.
Pros Of Using eWallet
1. Can be a budgeting aid
Many electronic wallets can help you track your spending habits. Some may generate reports that show you specific categories of spending.
You can also assign fixed budgets to specific cost categories to ensure that you’re not spending more than you should on certain items. If you have a big-ticket item to purchase, however, you can disable this feature to make sure there’s enough money available to make the payment.
You might decide to use GrabPay purely for car rides. In this case, you can assign a fixed budget for transport each month, and out it in your GrabPay. When the mobile wallet runs out, you know you have to switch back to public transport.
Mobile wallets also help you to keep track of your spending, as it accounts even for small deductions you may miss.
2. Safer than Cash in Some Circumstances
If you’re going abroad, or travelling alone, it can be dangerous to carry large amounts of physical cash. This is especially true in countries like the United States, where the biggest cash denomination is US$100.
By putting the money in your mobile wallet, you can ensure you don’t become a crime target due to the noticeable “cash bulge” in your pockets.
Plus, if you have a wad of cash in your pocket that gets lost, you have zero options available to you to recover your funds. Losing your credit cards means you must contact each lender to cancel each card, then have a new one issues.
With an electronic wallet, the information is stored through a third-party provider. It’s locked behind your password or biometrics. Even if you lose your device, you’ll still have access to your e-wallet once you get a new device.
3. Faster and More Convenient
Payment through a mobile wallet can be faster and more convenient. For example, if you are making a purchase online, going through your mobile wallet can be easier than going through a credit card (you may not need to key in all your details manually).
Some mobile wallets now allow you to pay bills, just by tapping your phone against a card reader (e.g. ApplePay). Some mobile wallets, such as PayPal, speed up the process of ordering things online – with stored cash, you don’t need to go through the process of keying in card numbers for every purchase.
4. May Have Rewards for Spending
Some mobile wallets give you reward points for spending, just like credit cards. For example, purchases made through GrabPay earn points, which can be redeemed for ride discounts, movie tickets, or store vouchers.
Many electronic wallets offer incentives to encourage consumers to use them instead of traditional payment methods. You may find discounts apply to certain purchases, such as fuel, food, or travel.
Some businesses may work with your e-wallet provide to offer specific discounts as well. That means you have the potential to save money without changing your spending habits. You’re just changing how you pay for those items.
5. It can be used at most retailers and online stores
Electronic wallets have become widely accepted within the past few years. Most locations that accept cards as a payment option will allow you to pay with your electronic wallet.
Although there are still some locations that are using older processing technologies, which does limit some product or service access, the number of retailers who provide payment access in this manner continues to increase each year.
Cons Of Using e-Wallet
The main drawbacks of using a mobile wallet are:
1. They can encourage spending
While mobile wallets can help budgeting, they can also end up encouraging you to spend. The most common example is if you’ve already budgeted the money, but end up with an excess.
For example, say you budget to spend S$150 on car sharing rides this month, and allocate this amount to your GrabPay. At the end of the month, you find you still have S$60 left.
Rather than save this mount (by topping it back up to S$150 ot transferring it to your savings), you may decide to indulge and get car rides everywhere – even if you don’t need them. This is because mentally, you’ve already“budgeted” to spend the money.
2. Giving Away Sensitive Information
Signing up for a mobile wallet may require sensitive information, such as your credit card number, email address, phone number, etc.
There’s a risk that you’ll be bombarded with advertising material, which is inconvenient. However, you also need to consider the possibility of someone hacking into the mobile wallet, and acquiring your information. This can result in more seriosu consequences, such as identity theft.
3. The Risk of the Mobile Wallet Failing
What happens to the money in the mobile wallet, if the company providing it closes down? Remember a mobile wallet is not a bank; there may be no obligation to refund you if it’s shut down, with your cash still in it. Be sure to read the terms and conditions to check for this.
Likewise, some mobile wallets may have reliability issues. If the wallet is down, you may be unable to access your money until the problem is fixed. This can be a major inconvenience, such as if you’re trying to book flight tickets urgently.
4. It is not fully available worldwide
The number of retailers which accept payments from an electronic wallet depends on the actual wallet you choose.
In December 2016, just 36% of retailers accepted Apple Pay. 34% of retailers accepted PayPal as a form of payment. Just 25% of retailers accepted MasterPass. About 2 million retailers in North America currently provide access to some form of mobile payment through an electronic wallet.