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Online Wallets and Mobile Banking

posted by: Blog Author date: Apr 26, 2017 category: All, Expert Explanations comments: 0

An online wallet (or digital wallet) is a program or web service that allows users to store and control their online shopping information (such as: usernames, passwords, shipping addresses and credit card details) in one central place. It also provides a convenient and quick method for consumers to make purchases from any person or store world-wide.

As a result of slow adoption and fierce competition, at present there are no “standard” online wallet that is globally accepted. Acceptance of online wallets as a payment method varies according to individual store policy and the type of online wallet. As an example, Google Wallet is accepted at Mastercard Paypass locations across the US. In contrast, Bitcoin, although internationally acceptable, is not as accepted in the US, due to its affiliation with black-market websites like Silk Road (marketplace). Analysts predict that as the use of online wallets increase, consumer adoption of specific technologies will result in a reduction of the number of online wallets available.

Below are just some of the online wallets that are currently available:

Bitcoin Wallet

In June 2012, Coinbase was founded as an online wallet and platform where suppliers and consumers could transact with the digital currency ‘bitcoin’, the world’s most widely used alternative currency. Bitcoin boasts 960,000 consumer wallets, 23,000 merchants, 4,000 API applications U.S., and bank integration. Just like your real-life wallet, your digital wallet must be secured. Bitcoin makes it possible to transfer value anywhere very easily, whilst also allowing you to be in control of your money. However, this versatility also comes with great security concerns. Bitcoin can provide very high levels of security if used correctly.

Google Wallet

Google developed their Google Wallet in September 2011 as a peer-to-peer payments service, allowing people in the US to send and receive money from a mobile device or PC free-of-charge for situations such as splitting the cost of shared expenses, reimbursing each other, or keeping track of joint spending. A Google Wallet account must be linked to an existing debit card or bank account in the United States. The digital wallet allows you to shop in stores, send money and make online purchases on Google Play and other online merchants. Google Wallet can be used in over 125 countries, with online merchants in over 160 countries and territories accept Google Wallet as well. Financial information is stored with Google Wallet Purchase Protection, which covers 100% of eligible unauthorized Google Wallet transactions.

Apple Pay

Apple launched Apple Pay to the US market in September 2014 as a mobile payment and digital wallet to allow users to make payments using an iPhone, Apple Watch, iPad or Mac. Apple Pay does not require Apple Pay-specific contactless payment terminals, and can work with existing contactless terminals. Apple Pay uses the EMV Payment Tokenisation Specification. The service keeps customer payment information private from the retailer by replacing the customer’s credit or debit card Primary Account Number (PAN) with a tokenized Device Account Number (DAN), and generates a “dynamic security code” for each transaction. Over the years, Apple Play has launched in many other countries, including Australia in 2016.

Samsung Pay

Samsung Pay is a mobile payment and digital wallet service by Samsung Electronics that lets users make payments using compatible phones and other Samsung-produced devices. The service supports contactless payments using near-field communications, but also incorporates an electromagnetic transmission system that allows contactless payments to be used on payment terminals that only support magnetic stripe cards. The service was launched in South Korea in August 2015 and in the United States in September of the same year. In 2016, the company announced that Samsung Pay would be launched via a number of banks in Australia, Brazil, Spain and Singapore. Samsung Pay’s security measures are based on Samsung Knox and ARM TrustZone technologies where credit card information is stored in a secure token and payments must be authenticated using a fingerprint scan.

Android Pay

In July 2014, Google launched Android Pay in Australia, with over 28 financial institution partners (significantly more than the one or two banking partners that Apple and Samsung launched with). Australian phone users download the Android Pay app, and activate it by registering an eligible credit card. Once set up, users can unlock their phone and “tap and go” at a payment terminal to pay for an item. The phone transmits an encrypted token to the machine, rather than your credit card number, for security.

How to Keep Your Wallet Secure

  • Be cautious of any service designed to store your money online. Several online wallets have experienced security breaches in the past, and these services often don’t provide adequate security to be used to store money like a bank.
  • Use different credentials for your digital wallet compared to other services. Also, be wary of using third-party wallets.
  • A digital wallet is like a wallet with cash. You wouldn’t keep thousands of dollars in your pocket, so the same philosophy should apply to your digital wallet. It is better to only keep small amounts of bitcoins/funds on your computer, mobile, or server for everyday use and keep remaining funds in a safer place, like a bank (not under your mattress).
  • Backup your wallet. If you store a backup in a safe place, it can protect you against human error or computer failures. If you encrypt your wallet, it can also be useful to recover your wallet if your mobile or computer is ever stolen.
  • Make sure to have strong passwords, and change them regularly; create ones as strong and secure as possible (using random set of characters with numbers and special characters).

Mobile Banking and Payments Statistics

The use of mobile banking continues to rise. A Consumers and Mobile Financial Services report released by the US Federal Reserve in March 2016, reported that:

  • 87% of the U.S. adult population has a mobile phone, the same as in 2014 and 2013.
  • 77% percent of mobile phones are smartphones (Internet-enabled), up from 71 percent in 2014 and 61% in 2013.
  • 53% percent of smartphone owners with a bank account, had used mobile banking in the 12 months prior to the survey, up from 52% a year earlier.
  • The three most common mobile banking activities among mobile banking users were: checking account balances or recent transactions (94%), transferring money between an individual’s own accounts (58%), and receiving an alert -e.g., a text message, push notification, or e-mail- from their bank (56%).
  • The three most common mobile payment activities among mobile payments users with smartphones were paying bills through a mobile phone web browser or app (65%), purchasing a physical item or digital content remotely using a mobile phone (4%), and paying for something in a store using a mobile phone (33%).
  • According to the survey, 67% of Millennials now use mobile banking. This is in stark contrast to 18% usage for those consumers aged 60 or over.

Statistics provided by Statista (one of the leading statistics companies on the internet), found that 91% of the Norwegian population access online banking sites, making Norway the country with the strongest internet banking penetration in Europe.

In Australia, Roy Morgan reported that, in 2013, 26.2% of users accessed the Internet via their mobile phone, rising to 33.6% in 2015. Internet use via a website was 53.1% in 2013, with a slight decline in 2015 to 52.5%. The Australian Bureau of Statistics reported that in 2014–15, 72% of the population participated in online banking.

With more online banking and payment services being offered every day, consumers need to be mindful of their digital security, before looking for quick and easy ways to make online purchases.

Demonstrating caution is the first step to keeping your credentials protected. By being aware of your own personal digital security, small steps including monitoring dollar amounts put on your digital wallet, choosing secure digital wallets and regular back-ups of your digital wallet can decrease the risk of losing your personal information to criminals. Don’t take the risk!

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