Evaluation Essay Sample on Electronic Wallets

Introduction

Electronic wallets are defined as digital payment systems that track a consumer’s payment information. When online shopping, electronic wallets supply the consumer’s payment information to the site, a factor that allows straightforward transactions. Cross (2014) notes that buyers can set up electronic wallet accounts to ensure availability at any time. Ideally, an electronic wallet stores information such as debit card data, credit card data, payment platform connectivity as well as banking information. As a result, a buyer can utilize these systems instead of carrying their physical cards and wallets. According to Gangawane (2016), different wallets have different uses in various circumstances. With the development of e-commerce at a global level, it has become more convenient for consumers to use their electronic wallets, particularly when shopping on online platforms.

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Every year, more and more consumers are utilizing digital wallets to store their financial information. With this increase, there is a need to perform a study that allows buyers to understand how e-wallets work. Particularly, this topic is crucial given the sensitivity that is attached to individual finances. Vandezande (2013) notes that the increase in cybercrimes puts customers at risk when they utilize their digital wallets. Therefore, consumers need to understand how they can use their digital wallets safely without compromising their financial information. According to Cross (2014), the main roadblock in utilizing electronic wallets is a lack of awareness among consumers. In a study conducted by Vandezande (2013), it was found that 52% of buyers know about digital wallets but are reluctant to utilize them as they are not sure about their safety. In this regard, this topic plays a critical role in highlighting the advantages and disadvantages as well as risks of using digital wallets. This study aims to explore various properties of electronic wallets, their pros, and cons as well as their impact on the current generation. The following research questions will guide the study:

• Which factors attract customers to electronic wallets?
• Which e-wallets do most users prefer?
• What are the main pros and cons of e-wallets?
• Which factors attract customers to electronic wallets?

Primarily, traditional payment methods are often inflexible. Levitin (2016) notes that these methods can hardly adapt to the changing landscape in the global market. Currently, banks act as intermediaries by proving basic financial tools such as bank accounts and payment cards. Consumers across the globe are increasingly shifting to online payments, particularly due to the introduction of diverse smartphone applications. In a study conducted by Cross (2014), it was found that millennials are spending more and more on online shopping and other services. As such, there is a demand for payment options that are more flexible and accommodating to the new lifestyle. Economic experts refer to the millennial generation as the gadget generation. Gangawane (2016) argues that the income levels of this generation will continuously increase with technological advancements. In this regard, retailers need to evaluate the factors that attract consumers to electronic wallets so as to leverage the advantages of the new market.

Vandezande (2013) found that millennial customers are attracted to digital wallets as they offer an international experience. Currently, large retailers including Walmart and Starbucks are introducing digital wallets to increase and widen their market base. Cross (2014) acknowledges that the introduction of this payment option offers a form of comfort that sought after by many customers. While various global brands have adopted the use of digital wallets, most retailers are yet to understand the elements that attract consumers to digital wallets. In this regard, more studies need to be directed towards understanding why customers prefer electronic wallets over traditional methods. By exploring this research question, businesses can fully equip themselves to leverage the various benefits of digital wallets.

What Are the Main Pros and Cons of E-wallets?

Gangawane (2016) maintains that the purchasing process has drastically changed due to the use and implementation of new technologies. The introduction of augmented reality and chatbots has allowed services development as these strategies attract new customers as well as maintain the loyalty of the existing customers. In this regard, Pachare (2016) argues that a well-developed electronic wallet enables retailers to create and develop unique services that are tailored to the customer’s preferences. This element is possible as businesses can acquire information on customer preferences through their activity. The primary goal of most businesses is to achieve and maintain high profitability levels. Levitin (2016) argues that consistent profitability is only possible if consumers are enjoying maximum comfort. A study conducted by Gangawane (2016), showed that at least 45% of consumers in the United States are willing to forego a product or service if there are long queues. Moreover, 86% of consumers experience cognitive stress when queueing for checkout. Electronic wallets provide fast and efficient services. Consequently, most consumers prefer shopping from retailers whose payment option includes digital wallets. According to Levitin (2016), some customers and retailers avoid using digital wallets due to the increase in cybercrimes against financial institutions. Pachare (2016) argues that at least 30% of retailers in the United States report negative experiences resulting from theft of data, hacking as well as compromise of information. In this regard, more studies need to be conducted to understand how retailers can securely set up e-wallet payment options. Furthermore, more studies should be directed towards understanding the security benefits of digital wallets. Currently, most studies have been directed towards understanding how retailers benefit form electronic wallets. This research question will be focused on understanding how consumers can leverage the pros of these resources and how they can be protected from the cons of e-wallets.

Which E-wallets Do Most Users Prefer?

Pachare (2016) notes that consumers prefer digital wallets that are efficient and easy to use. In this regard, retailers must be willing to develop applications that are handy enough for their consumer base. Levitin (2016) found that the most popular e-wallet options include Android Pay, Apple Pay, and Samsung Pay. Currently, only PayPal is applicable to all devices. Some retailers have introduced brand-specific digital wallets including Capital One Wallet, Walmart Pay, and Starbuck Wallets among others. From a broad perspective, most applications are applied in the same way. Nonetheless, security is a major concern. Pachare (2016) maintains that most businesses use encryption and chip cards to improve security.

Vandezande (2013) investigated some of the reasons why millennial consumers prefer some digital wallets over others. The results indicated that customers considered factors such as usability, security, passwords, biometric technology as well as tokenization and account blocking. In regards to biometric technology, the researchers found that most people were attracted to e-wallets that had biometric features as they felt more secure. Furthermore, e-wallets that easily blocked accounts were avoided as they were considered inconvenient. Ultimately, the researchers concluded that customers preferred e-wallets that were easy to use and secure. This study will explore this research question by comparing various features of specific e-wallets as well as identifying why customers prefer some over others.

Conclusion

Digital wallets have become a popular mode of payment across the globe. Nonetheless, some people are not aware of the main advantages and disadvantages of using these resources. Consequently, they have stuck to traditional payment methods which are limiting in the current global landscape. In this regard, exploring the aforementioned research questions provides a complete picture of digital wallets and their future. Moreover, research questions provide a detailed background for individuals who may want to develop e-wallets and have the right experience. By understanding why customers prefer some e-wallets over others, businesses can identify the best practices in making digital wallet applications. Consequently, it will be easier to develop applications that achieve maximum benefits and accrue more transactions every day. Ultimately, understanding how digital wallets work as well as their benefits and risks will allow customers and retailers to understand when and where to use them.

As indicated, e-commerce is quickly becoming a global affair. Consequently, the demand for electronic wallets is also increasing. Where there is high demand, more supply is needed. As such, more and more retailers are focused on making branded e-wallets to remain competitive. Essentially, digital wallets are a novel concept with a great future ahead. Therefore, there is a need to understand how they work in different niches and how they affect every customer. Thus, understanding various features on electronic wallets allows retailers to retain a strong position even in the face of competition. From the discussion, the main advantages of e-wallets have been identified as speed, convenience, and security. Nonetheless, the security threats have also been identified as a concerning concept given the increase in cyber-crimes. Ultimately, more studies should be conducted to understand the security benefits of e-wallets.

References

Cross, P. (2014). The Public Purse versus Private Wallets: Comparing Provincial Approaches to Investing in Economic Growth. SSRN Electronic Journal.

Gangawane, S. (2016). Cash on the Go! Digital Wallets and Demonetization! SSRN Electronic Journal.

Levitin, A. J. (2016). Pandora’s Digital Box: Digital Wallets and the Honor All Wallets Rules. SSRN Electronic Journal.

Pachare, S. M. (2016). Demonetization: Unpacking the Digital Wallets. We’Ken- International Journal of Basic and Applied Sciences, 1(4), 180.

Vandezande, N. (2013). Mobile Wallets and Virtual Alternative Currencies Under the EU Legal Framework on Electronic Payments. SSRN Electronic Journal.