Today almost any kind of an application assisting you to handle your money can be called a digital wallet. The examples include anything from an online banking app to remittance services. But what is a digital wallet precisely? Read on to figure this out, compare a digital wallet vs a bank account, learn how to create and use a digital wallet, and decide whether you should have one at all.
What is a digital wallet
An umbrella term for various services, a digital wallet is a specific type of application or a software-based system that operates on a connected device. It can be used both online and in the physical environment, for example when paying at a terminal in a store, just as with traditional bank cards. At a basic level, the purpose of a digital wallet is the same as of a common one: to store various means of payment. But at the same time, it offers much more.
Among the things that can be kept in a digital wallet are:
- Traditional bank cards that can be used for payments, money transfers, and so on
- Gift certificates
- Loyalty cards, coupons, vouchers
- Event tickets and transport tickets
- Bookings at hotels, museums, and other venues.
In some cases, you can even store your ID documents or car keys there. No wonder that the adoption has been steadily growing in the last five years, and today nearly 4.5 billion people have one or more digital wallets, which is more than half of the global online population.
Some of the most popular digital wallet examples are Apple Pay, Google Pay, PayPal, and Vodafone M-PESA among others. But other fintech products, like Wise, Revolut, or Profee, are also popularly referred to as such. Perhaps when researching how to use digital wallets, many assume that any finance-related service is one. There is some truth to it, too, since, resembling a physical wallet, such providers operate in a multicurrency setting. This enables customers to handle their money in different currencies enjoying much more favourable conversion rates compared to traditional banks’ fees.
Digital wallet vs bank account
The features of the two overlap but their purposes are different. As the digital wallet examples above show, there are many options that traditional banks do not offer. But the opposite is also true as a bank account allows more control over your finances.
So, how does a digital wallet vs a bank account compare, for example, for international money transfers?
Cost
Online currency exchange rates are known to be much more competitive than those offered by traditional banks. Even more impressive is the difference between charges applied to transactions. The traditional banks’ fees for a money transfer abroad can be several times higher than with a fintech provider. For example, Profee offers its customers one of the best exchange rates on the market at any given moment thanks to its in-house monitoring system. There are also special promo rates on your first transaction and zero commission on transfers to selected destinations.
Speed
In this category of a digital wallet vs a bank account comparison, the former is an absolute leader. While it may take traditional banks up to several working days to send money overseas, a Wise or Profee transfer, for instance, reaches its destination within minutes.
Requirements
Opening a bank account is a demanding affair with many documents to be submitted and forms to be filled out, often during an in-person visit to a branch. And how to create a digital wallet? Much more easily; you only need a connected device for that. Although some providers, such as Revolut, request their customers provide exhaustive personal information on signup, others like Profee only ask for basic details such as name, date of birth, and email address. As a result, the registration only takes a couple of minutes, and additional verification (say, proof of income) is only required when sending larger amounts.
Convenience
Money transfers is an excellent example to compare digital wallet vs bank account. When sending a bank transfer, you need to provide specific information about the recipient such as their bank account number and branch code. And how to use a digital wallet to send money? You only need the recipient’s card number or even only their phone number, such as the case with M-PESA. In other words, digital wallets operate in a much more user-friendly environment than traditional banks.
Security
Banks are still regarded by some as the most secure way to transfer funds. However, with trusted fintech providers like Revolut, Wise, or Profee, the security of all transactions is taken to another level. Employing much more advanced technological solutions, they strictly adhere to all regulatory and industry requirements. They also use multifactor authentication combining biometrics (facial/fingerprint recognition), PIN codes, and passwords.
To conclude, digital wallets provide convenient and secure solutions to manage your financial activities including international remittances. By choosing a leading service such as Profee you enjoy favourable exchange rates, bonuses such as special promo rates and commissions, a generous referral programme, and countless other benefits. Get an iOS/Android app or check the web converter to see how easy and profitable your money transfers can be with Profee.
