DIGITAL WALLETS AND

MOBILE BANKING
BAE110 FINANCIAL LITERACY
DEFINITION AND OVERVIEW:
● Digital Wallets: Electronic devices or platforms that allow individuals
to make electronic transactions, including online purchases and
mobile payments, without using physical cash or cards.

● Mobile Banking: Banking services accessible through mobile devices,

enabling users to perform various financial activities such as
checking account balances, transferring funds, and paying bills.
EVOLUTION AND GROWTH:

● Digital Payment Methods: Initially, transactions were conducted using

physical cash or checks. With advancements in technology, digital payment
methods emerged, including credit/debit cards, online banking, and now
digital wallets and mobile banking.
● Growth Trends: Digital wallets and mobile banking have witnessed
exponential growth, driven by increasing smartphone penetration, internet
connectivity, an-d consumer demand for convenient and secure payment
solutions.
❖ Features and Functionalities of Digital wallets and
Mobile Banking
Digital wallets primarily focus on facilitating electronic payments and transactions, while mobile banking apps provide
comprehensive access to banking services and account management functionalities. Both technologies contribute to
the digitization and convenience of financial services, offering users flexibility and efficiency in managing their
finances.

Both digital wallets and mobile banking offer a wide range of functionalities designed to simplify and
streamline the management of finances for users.

Digital wallets and mobile banking have revolutionized the way individuals conduct financial transactions,
offering convenience, security, and flexibility in managing their money anytime, anywhere, using their mobile
devices. These technologies continue to evolve, incorporating new features and innovations to meet the
changing needs of consumers in the digital age.

Digital wallets and mobile banking are both technologies that enable financial transactions and management
through digital platforms, but they have distinct features and functionalities:
Key components of features and functionalities of
Digital wallets and Mobile Banking
● Features and functionalities of Digital wallets
1.Payment options
2.Card storage
3.Bill Payments
4.security features
5.Rewards and Loyalty Programs
6.Budgeting Tools
7. International payments

● Features and Functionalities of Mobile Banking

1.Account Managements
2.Transfer Funds
3.Mobile Deposits
4.Loan and Credit Card Applications
5.Alerts and Notifications
ADVANTAGES and DISADVANTAGES
Advantages:
1. CONVENIENCE - Digital wallets and mobile banking offer convenience by allowing us to make
payments, manage our finances, and access banking services right from our smartphone. We
can securely store our payment information, make quick transactions, and easily track our
expenses on the go. It’s like having a bank in your pocket.
2. SPEED - Digital wallets and mobile banking are lighting fast. With just a few taps, we can
make instant payments, transfer funds, and check our account balance in seconds. No more
waiting in long queues or dealing with slow traditional banking methods. It’s all about speed
and conveniences.
3. SECURITY - When it comes to security, digital wallets and mobile banking have got us back.
We use advanced encryption technology to protect our personal and financial information.
Plus, features like biometric authentication and transaction alerts and an extra layer of
security. Our money is in safe hands.
4. LOYALTY REWARDS - Loyalty rewards in digital wallets and mobile banking are like little treats
for our loyalty. They offer incentives, discounts, or points that we can earn and redeem for various
perks. It’s a way for companies to show appreciation for our continued support.

5. CONTACTLESS PAYMENTS - Contactless payments in digital wallets and mobile banking it’s
like magic. We can simply tap our phone or wave our smartwatch to make payments without
needing to swipe a card or enter a PIN. It’s quick and convenient. No more fumbling for cash or
cards. Just tap and go.
Disadvantages:
1. SECURITY RISKS - When it comes to security risks in digital wallets and mobile banking, it’s
important to stay vigilant. While these platforms have robust security measures in place,
there’s always a small chance of fraud or unauthorized access. It’s a crucial to keep our
devices and login credentials secure to minimize any potential risks. Digital wallets have
several common security measures to keep our information safe. Some of these include
password protection, encryption of sensitive data, two-factor authentication, and biometric
authentication like fingerprint or face recognition. These measures work together to ensure
the security of our digital wallet.
2. RISK OF FRAUD - When it comes to fraud risks in digital wallets and mobile banking, it’s
important to be aware. There’s small chance that unauthorized individuals may try to access
our account or make fraudulent transactions. Keep an eye out for any suspicious activity and
report it immediately to our bank or wallet provider.
3. TECHNICAL PROBLEMS - Technical problems in digital wallets and mobile banking can be
frustrating. Some common issues include app crashes, slow loading times, or errors during
transactions. These problems can occur due to network connectivity issues, server maintenance,
or software glitches. It’s always a good idea to keep our apps updated and clear any cache or
temporary files. If we encounter technical problems, we can reach out to the customer support of
our wallet or bank for assistance. They can help troubleshoot and resolve any issues we may face.

4. LIMITED ACCEPTANCE - Limited acceptance in digital wallets and mobile banking refers to the
fact that not all merchants or establishments may accept digital wallet payments or mobile
banking transactions. While the popularity of digital payments is growing, there are still some
places that may only accept traditional forms of payment like cash or cards. It’s always a good idea
to check with the merchant beforehand to ensure they accept our preferred payment method. As
digital payments become more widespread, the acceptance is expected to increase.
5. HIDDEN FEES - Hidden fees in digital wallets and mobile banking refer to additional charges that
may not be clearly disclosed upfront. These fees can include transactions fees, account
maintenance fees, or fees for certain services. It’s important to carefully review the terms and
conditions of our digital wallet or mobile banking provider to understand any potential fees that
may be associated with our transactions or account. Being aware of these hidden fees can help us
to make informed decisions and avoid surprises. An example of a hidden fees in digital wallets or
mobile banking could be an inactivity fee. Some providers may charge a fee if our account remains
inactive for a certain period of time. This fee might not be explicitly mentioned upfront, so it’s
important to read the terms and conditions or contact customer support to understand all the
potential fees associated with our account. Being aware of these hidden fees can help you manage
your finances more effectively.
Behavioral Economics
Understanding the rationale behind financial decision-making has always been a challenge. Money is a
part of our everyday modern consumer life, from family budgets to national politics, from shopping lists to
saving accounts.The truth is, making bad money decisions is the hallmark of humanity.Behavioural
economics is how people and businesses think about money in rational ways and how they behave with
money. Here we are looking at 3 aspects of behavioural economics

Emotional accounting We tend to sort our money into different mental accounts, with different rules
and usages.Therefore there is a gap between money that we spend on ‘responsible purchases’ and
money that we spend on ‘luxury’ items. Banks can help us in controlling the emotional side of money
management by giving us a detailed breakdown of our fixed expenses, and helping us to make more
informed decisions about our disposable income. People tend to have similar expenses each month, so
by banks showing us what the best course of action is for our money, they can help us plan ahead and
spend less on the unnecessary.
 The Pain of Paying:
We experience some form of mental or physical pain when we pay for things,studies have shown that
when it comes to paying, the areas of the brain involved in processing physical pain are triggered.Banks
have the potential to decrease the pain of paying in daily lives, something that logically has greater benefits
for them than the customer, though they would do well to place greater emphasis on enhancing the
“pleasure” that comes from saving. Banks help us to avoid this feeling by stepping in to solve both
last-minute financial problems (so that unexpected issues don’t impact on our finances), and think ahead
about the long term, so that the future is under control.

Anchoring:Anchoring occurs when we are drawn to a conclusion by something that should not have any
relevance to our decision. When attempting to market another product or service in banking, it's critical to first give
the information needed to make the most of the service that has been opened.Our reliance on anchoring
increases with decreasing knowledge. By just clicking a button, Open Banking expands the availability of current
products such as debt and credit and instantly launches new ones. Considering that banks must now supply their
data in a more uniform manner, digital comparison tools will make evaluating complex product pricing much
simpler.You have to earn the end user's trust before you can become an advisor. Moreover, openness is essential
to earning that trust. Rebuilding a trusting connection between banks and open banking may be possible.
 CASE STUDY-GOOGLE PAY

INTRODUCTION
Google Pay is one of the world's most popular mobile payment and digital wallet platforms.
It was created by Google. This case study explores the history of Google Pay, as well as its
salient characteristics, adoption patterns, obstacles, and effects on the payments industry.
When making in-person or online purchases, users link their credit or debit cards to their
Google Pay accounts. Google Pay communicates with payment terminals using near field
communication (NFC) on Android smartphones. Users may perform purchases using
Google Pay on websites that support the service by logging with their Google account in the
Chrome browser. Additionally, a list of supported banks is kept up to date by nation on the
Google Pay user page. A list of highlighted retailers and transportation providers who
accept Google Pay is also available on the Google support website.
 FEATURES CHALLENGES
The digital payments ecosystem has been
significantly impacted by Google Pay. Despite its popularity, Google Pay still has a number
● Convenience: By eliminating the need for of issues.
actual wallets and currency, it provides ● Security Concerns: Considering the frequency
consumers with an easy and effective way to of cyberattacks, ensuring the security of user
manage their affairs. data and transactions is still of utmost
● Financial Inclusion: By giving importance.
underprivileged people access to digital ● Regulatory Compliance: Google Pay faces
payment services, Google Pay has difficulties in adhering to changing legal
contributed to the advancement of financial requirements, particularly those pertaining to
inclusion. data protection and financial regulations.
● Business Growth: Companies who used ● Market Competition: In order to sustain its
Google Pay saw a rise in revenue and a market position, Google Pay must constantly
boost in consumer engagement as a result of innovate in order to compete with other digital
more convenient payment methods. payment services.
● Data Insights: Businesses can gain
significant insights into consumer behaviour
and preferences by utilising the data
generated by Google Pay.
CROSS BORDER
Cross-border trade in pointers refers to the exchange of goods, services, or financial assets across
national borders using various mechanisms, including contracts, agreements, or virtual platforms.
Pointers are essentially indicators or cues used to direct attention or indicate direction. In the context
of trade, pointers may represent specific goods, services, or investments.

This type of trade involves navigating through regulatory frameworks, tariffs, customs duties, and
other barriers that exist between countries. It often requires adherence to international trade
agreements and standards to facilitate smooth transactions.

Cross-border trade in pointers can encompass a wide range of activities, including importation and
exportation of physical goods, provision of services such as consulting or software development
across borders, and investment in foreign financial markets.
Key factors influencing cross-border trade in pointers include government policies,
economic conditions, technological advancements, and cultural differences.
Additionally, factors such as exchange rates, transportation costs, and logistical
considerations play a crucial role in shaping the landscape of international trade.

Overall, cross-border trade in pointers is a complex and dynamic process that

contributes significantly to global economic growth and integration, while also
presenting challenges and opportunities for businesses and policymakers alike.
FUTURE OUTLOOK
Digital wallets and mobile banking are expected to become mainstream in the near future. Following trends
might be seen in the future of digital wallets and mobile banking:

Better Security

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THE EMERGING TECHNOLOGIES 0F DIGITAL PAYMENTS AND
ASS0CIATED CHALLENGES

The payment system is Lack Of Faith

rapidly changing from
coin-based and Inadequate User
Limited Adoption
paper-based money to Experience

digital forms of CHALLENGES

payments that are

convenient, fast and cost Security Issues Regulation Obstacles

effective.
Social and Economic Impacts
Impact on traditional banking institutions and brick-and-mortar businesses
1. Customer-Centric Approach:
Traditional banks have historically operated with a product-centric approach, offering a predefined set of
financial products and services. Fintech companies, on the other hand, prioritize a customer-centric
approach by tailoring their offerings to meet the specific needs and preferences of their users.To stay
competitive, traditional banks are reevaluating their policies and strategies.
2. Digital Transformation:
The fintech revolution has accelerated the digital transformation of traditional banks. Many legacy
institutions are investing heavily in upgrading their digital infrastructure to offer online and mobile banking
services This shift towards digitalization includes implementing features like real-time transactions,
paperless account opening, and digital customer support.
3. Regulatory Compliance:
The emergence of fintech has brought about new regulatory challenges for traditional banks.
4.Financial inclusion
One notable positive impact of fintech on traditional banking policies is the emphasis on financial inclusion.
Fintech has demonstrated the potential to reach unbanked and underbanked populations, offering them
access to financial services that were previously out of reach.
Societal implication of a Cashless Economy

1.Improved tax collection: A cashless society would make it easier for governments to collect taxes. This is
because all electronic transactions are recorded, which makes it easier to track income and sales. This
could lead to an increase in tax revenue, which could be used to fund government programs or reduce the
deficit
2.Security risks: A cashless society would rely on electronic payment systems, which are vulnerable to
cyberattacks. This could lead to financial losses for businesses and individuals
3.Costs: The transition to a cashless society would require significant investment in new infrastructure and
technology. This could be a burden for businesses and government
4.Increased financial inclusion: A cashless society could make it easier for people who are not well-banked
to participate in the economy. This is because electronic payment methods are often more accessible than
traditional bank accounts.
Overall, the potential impacts of a cashless society on the economy are complex and far-reaching. There
are both potential benefits and challenges that need to be considered before making a decision about
whether or not to move in this direction
MOBILE BANKING
FEATURES
CONCLUSION:

To sum up, digital wallets and mobile banking are changing how people manage
money. They make it easy to access banking services anytime and anywhere. These
tools are not just about transactions; they help bring banking to everyone, even those
who couldn't access it before. By doing this, they help boost the economy, reduce
poverty, and make society fairer. As we move forward with these changes, it's crucial
for everyone involved—like governments, banks, and tech companies—to work
together. This ensures that everyone benefits from these innovations, making our
financial world more inclusive and sustainable for everyone.
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