Why Secure E-Wallets Are Gaining a Competitive Edge

Billed as the future of real-world payment technologies, the jumpstart of digital wallets or “e-wallets” have put real-world pressure on many retail outlets to embrace e-wallet payments. Unlike e-banking, e-wallets allow consumers to put a specified amount of cash directly on their phone to spend both online and in-store.

Unfortunately, the technology has met resistance. Common misconceptions about mobile wallet security and viability as a service have caused many retailers as well as consumers to become wary of using e-wallet payment services.

It’s true that anytime you broadcast data across a mobile or wireless network you’re accepting the risk of that data being intercepted. However, secure e-wallets make sure to utilize a number of security measures that have many tech experts viewing digital payments as safer and more efficient than physical payment (i.e. ATM machines or swiping a credit card at a retailer store).

Encryption Technology

E-wallet payment providers make heavy use of modern encryption technology to enhance mobile wallet security. Many people fail to realise that we use encryption technology on a daily basis. Nearly every computing device from smartphones to desktops to tablets utilizes some level of encryption to keep consumer information safe. It does this by turning normal data or “plaintext” into a grouping of random characters or “ciphertext” that can only be read by those with a special key. The majority of companies use a 128-bit data encryption technology to secure their data.

Is encryption really safe?

The amount of time, computation cost, and patience to crack modern encryption algorithms make breaking an encryption without a key a near impossible task. That’s not to say that encryption doesn’t have vulnerabilities, typically referred to as backdoors. However, the likelihood of these types of digital backdoors working is minimal at best.

Password Protected

The past few years have seen a dramatic shift in how and why consumers use their smartphones. Smart mobile devices connect people to their business and social networks as well as bank accounts, car insurance, medical databases, and even home operating systems. They are the life-blood for consumer day to day activities. To prevent access, smartphones employ a variety of mobile security measures. These include complex alphanumeric passwords as well as biometric protocols, such as fingerprint access and voice activation.

E-wallets employ a similar method. Consumers can add an additional password protection to their e-wallet account. Combining that with advanced encryption methods further protects a consumer’s information from hackers and other third parties.

Acts as a Proxy

Unlike credit cards, a secure e-wallet service will help conceal a consumer’s banking and private information. E-wallets only access the funds that a consumer makes available. This means that when a transaction is made, e-wallets do not access a consumer’s wider banking information to make payment and will not log metadata that can be captured by a third party. By acting as a proxy, e-wallets provide better mobile wallet security by preventing third parties from accessing information that can be used to commit fraud or identity theft.

Additional benefits of e-wallets that add to the payment service’s safety and usability include:


A secure e-wallet allows a consumer complete traceability of all of his/her transactions. Unlike cash transactions, every eCommerce transaction is logged and time stamped; and can be viewed at anytime and anywhere without having to go through the burdensome action of logging into your bank account and combing through your accounts.

Instant Payments

E-wallets allow quick and efficient transactions compared to bank accounts and credit cards that have to pass through additional databases and processing systems before the transaction is completed. It can take up to 2-3 days before a credit card or debit transaction appears on a consumer’s bank account, causing confusion about available balances.

Limited Risk

Let’s say someone loses their phone. It is unlocked or doesn’t have a password, and someone with less than positive intentions locates it. Whoever gets a hold of that phone will only have access to the funds placed in the e-wallet account instead of to an entire bank account through the loss of a physical wallet. The shortfall of funds would hurt but it would be minimal and short-lived since the majority of people who use secure e-wallets only put in a few days or weeks’ worth of pay.

Will e-wallets gain mass market popularity?

E-wallets are still in their early stages of development and adoption. Much of their success will hinge on whether or not big players like Google and Apple are able to integrate secure e-wallets into their most popular products. As with any new, hot technology, millennials are leading the way with a majority 58 percent ready to switch over to e-wallets.

Credit card companies are still relied on as the primary method of payment. They are viewed as a trusted and established business with a record of success for money management. Many credit card companies are resisting Silicon Valley’s push towards mobile wallet security payment systems, instead, putting their faith in their own in-house payment solutions and acquisition of smaller e-wallet companies. For example, MasterCard recently purchased C-SAM (formerly ISIS). C-SAM provided the back-end payment processing structure for Softcard, which was originally a joint venture between AT&T, Verizon, and T-Mobile that was purchased and dissolved by Google in 2013.

Until priorities are aligned between credit card companies, banks, and consumers, adoption of e-wallets into everyday use will continue to meet resistance as retailers and finance companies try to corner the market with their own in-house products instead of supporting a secure e-wallet system that isn’t their own.

As more companies hop on the e-wallet bandwagon and alternative options enter the market, consumers will ultimately choose the option that offers the most cost-efficient and convenient solution. If you’d like to learn more about how e-wallets will continue to enhance the way retailers, finance companies, and consumers engage, contact us today to explore this innovative field of products and services.

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