Digital wallets as a driver of financial inclusion
11/26/2024
By: Birdi fintech
There are several types of e-wallets, general-purpose wallets such as PayPal, Google Wallet and Apple Pay, which are versatile and widely accepted in various merchants, branded wallets, such as Mercadopago, Uala or MODO, which are developed by specific companies for exclusive use in their services and stores, offering a personalized experience, and cryptocurrency wallets such as Lemon, Belo, Ripio, which are designed to store and manage digital currencies, and are essential for those operating in this market.
Digital wallets, also known as e-wallets or mobile wallets, are mobile applications that allow users to store money and manage their finances to perform virtual transactions. These tools enable users to pay bills and taxes, make purchases at physical or online stores, manage investments, and even transfer money, just as one would with cards or cash.
These platforms incorporate encryption technologies and advanced authentication methods, such as passwords, PINs, and biometrics, ensuring secure usage. They also leverage technologies like NFC (Near Field Communication) to interact with point-of-sale (POS) terminals in physical stores, offering secure and contactless payment options.
There are several types of digital wallets: general-use wallets like PayPal, Google Wallet, and Apple Pay, which are versatile and widely accepted by various merchants, brand-specific wallets, such as MercadoPago, Ualá, or MODO, developed by specific companies for exclusive use within their services and stores, providing a personalized experience, and cryptocurrency wallets, including Lemon, Belo, and Ripio, designed to store and manage digital currencies and essential for users operating in the cryptocurrency market.
What truly makes these wallets revolutionary is their ability to democratize access to basic financial services. They allow people who cannot open a traditional bank account to create one and manage their finances.
This is why we can say that digital wallets play a vital role in global financial inclusion. They are far more accessible than traditional financial services, which often impose numerous entry requirements. Fintech solutions have eliminated these barriers. To start using digital wallets, all that’s needed is to download the app, fill out a simple online form (which typically doesn’t require proof of address or income), and users can begin transacting.
Additionally, they are much less expensive than traditional bank accounts because they eliminate many intermediaries in their value chain. Traditional banks, on the other hand, often impose various costs, such as maintenance fees and minimum deposit requirements.
For these reasons, digital wallets have become a driving force for broader and more equitable financial inclusion. In a world where, according to the World Bank, approximately 1.7 billion people remain unbanked, but 1.1 billion of them own mobile phones, digital wallets serve as a critical gateway to the evolving global economy.