Digital payments become more and more common and their users are able to pay for most of the things online.
Many people consider the digital payments system as an alternative for credit cards. This is true, and at the same time, it is not true. How? Let’s figure this out, is it better to have an e-wallet or credit card.
What are digital payments?
They are all online payment systems that use your bank account as a source of money, and not your credit card (or PMB/debit card). In other words – it is a cashless system that uses only money from your bank account. These kinds of payments often come with a username and password to access your bank account. You can deposit some money on this system, simply by entering the amount that you want to deposit and click “deposit”. After a while, the amount will be added to your deposit. But if you don’t deposit any money, then there is still a way to use this payment – simply enter the amount that you want to pay and click “pay”.
But how is it different from paying by card?
For this, a need to look into the core of the digital payments system. How does it work? Actually, it is very simple – you deposit some money on this e-wallet (it’s like your virtual bank account), and then when you want to pay for something with your card instead of using real credit cards or debit cards, you simply transfer it by using some numbers and passwords.
When paying by card attached to your bank account, you need to input all card details such as number, your name, card expiration date, and do it very carefully. Then you need to enter your card security code (CVV2/CVC2), and the time of payment. It is hard to remember those so you need to have a card with you to have access to those. Forgot your card? Sorry, you will not make the payment.
What do you need to make a digital payment? A device with Internet connection, digital payment system and your passwords. Sometimes software has an app and enables you to pay without putting in logging details every time as long as you have another type of authorization like a fingerprint scanner or face recognition system.
What are the advantages of digital payments overpaying by card?
As said above, you don’t need to enter all the details. The only thing that you need to do is enter the amount that you want to pay and your username (email) and password. Instead of entering a card number that has 16 digits or so, you simply use a 4-digits PIN on the e-wallet system.
Also, the e-wallet system has better security. It is only possible to steal more from it when someone stole your phone, has every pin number and all logging data, but then it is not an issue with the system but with you that you have not been careful enough. Sometimes even then it is not possible to make payment as some systems enable you to set up fingerprint security if your device has a scanner. It is much harder to hack the system than simply steal card information and do shopping online.
Paying by digital systems is also faster than paying by card for two reasons. There is less data to remember and input while paying and there are no transfer windows like in the bank that operates your card. That means if you want the receiver to have money today, you need to transfer the money today, ideally before midday. After the transaction is done, you will lose some time especially if the receiver has an account in a different bank. Complicated right?
With a digital payment system, it is much easier. Just enter the amount, username and password and you are done. Money is on the receiver e-wallet in a matter of minutes. Note that you do not need to open an account in the receiver bank. By entering his username, you send the money to their e-wallet so they decide what to do with it.
It is also much easier for people abroad, even those who are new in the country and they don’t have a credit card there. They can simply create an e-wallet and pay for things online. The whole process is very simple, there is no need to call the bank and make sure that you are using the card the right way or something like this.
But if you don’t have a bank account, how can you make payment? Well, in this kind of situation an e-wallet is really useful. You can simply create one easily and use it to make payments online. Some stores with more advanced terminals may have an option to pay using an e-wallet in their in-site store but it isn’t common.
In what situations does a credit card have a win?
Main advantage of a credit card that e-wallet does not have is the option to withdraw your money from it. If you need cash often, a credit card will be better to use because it is connected to your bank account and you can withdraw the money when you want. It isn’t possible with an e-wallet since it is not connected to your bank account, but if you are using money mostly online, it shouldn’t be a problem.
Moreover, credit cards can be used for payments in markets, stores and all the services that are not online. If you need to pay for something in-site, it is better to use a card than an e-wallet because it is possible that the receiver does not know what an e-wallet means or does not have the technology to receive such payment.
In general, an e-wallet can’t be considered as an alternative for credit cards since it doesn’t have every feature that credit cards have and it is not useful for paying offline, inside the store. Digital payments are, as the name itself states, great for payments done digitally, so online. So they might be treated as alternatives only when talking about purchases and payments done on the Internet. An e-wallet can’t entirely be used instead of credit cards and bank accounts attached to them.