What is the difference between an e-wallet and a payment gateway? www.deekpay.com

electronic wallet (e.g. for money)The popularity of digital wallets is increasing day by day, especially in the e-commerce industry and in the daily use of digital wallets for small purchases. Most of the population considers e-wallets to be more convenient for online transactions. Some even consider e-wallets to be a more secure and modern alternative to physical wallets. About e-wallets andPayment GatewaySee this article for details on the differences between.

What is an e-wallet?

An e-wallet is an application used to mimic our online physical wallets - users can use it to store money and purchase products and services via their computer or mobile phone. In addition, e-wallets are used as a method of authentication - they hold not only the user's credit card details and financial data, but also the user's shipping address, identity information and more.

To get one, one needs to checkdigital walletThe company's different options to open an e-wallet account and download the necessary applications to the user's mobile phone or computer.

virtual walletIncreasingly popular among consumers, so more and more eCommerce shops are updating their payment methods to meet the demand. To do so, business owners need to contact payment companies such as Stripe and Alipay to install the necessary APIs and start accepting e-wallet payments on their websites.

Some merchants go a step further and use thin wallets, also known as server-side digital wallets. As opposed to virtual wallets for customers, these wallets are located on the merchant's website and created for each buyer. Server-side wallets contain financial and personal information about the company's customers. Those who own such wallets need to enter their connected email address and password on the merchant's website in order to make a purchase.

To learn more about the functions of the e-wallet, we first need to point out the digital wallet,mobile walletThe difference between an e-wallet and an e-wallet.

What types of e-wallets are available?

To be clear, sometimes all of these types of e-wallets are seen as synonymous by PSPs, merchants and customers. Others see the differences as being in the services they offer. Below we have summarised their most common features, but keep in mind that sometimes a company may refer to its product as an e-wallet, but it will display the attributes of a digital wallet and vice versa. Therefore, before choosing a virtual wallet, make sure that the user always checks the description of the virtual wallet's services.

digital wallet

Digital wallets typically function less as standalone entities because they are attached to a bank account and are not used to store money.

Digital wallets are therefore containers that store a user's banking and personal information, allowing for faster and easier transactions. All of the user's credit card information will be stored in the digital wallet, and during the transaction, the user will only need to enter the wallet username and password to purchase goods online.

electronic wallet (e.g. for money)

These are used for storing funds, as well as making transactions and payments (if the user has transferred the required amount into them in advance). Financial and personal information is still stored in the e-wallet to make money operations faster.

mobile wallet

We are sure that users are familiar with the "touch to pay" method: the user enters a shop, selects an item, and then places his or her mobile phone on a POS terminal to pay for it instantly. This process is often associated with the term "mobile wallet". Near Field Communication (NFC) technology, often represented by apps on mobile phones or fitness watches, is used for quick transactions. As in the case of digital wallets, the user uses funds from a bank account rather than a wallet.

What is a payment gateway?

A payment gateway is a service provided by a payment service provider or bank for accepting credit card payments online. Payment gateways are used to authenticate the credit card owner, who processes the card details to purchase goods from the merchant, thus confirming that the transaction is not fraudulent.

The process goes like this: a customer adds a product to a shopping cart and now the payment gateway needs to make sure the buyer is using their card. That's why the customer needs to enter their credit card details to verify their identity. Once the payment gateway completes the verification process, the payment request is redirected to the PSP.

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What is the difference between an e-wallet and a payment gateway?

Firstly, users cannot really compare a payment gateway with a typical e-wallet, as the first is an integral element of payment processing, while the latter is a payment method that requires a payment gateway for a successful transaction.

However, some of their features affect the way payment details are handled during payment processing, and this is where we can compare the two.

As we have already explained, when a person makes a purchase online they are required to go through an authentication process via a payment gateway. In most cases, the customer will be asked to perform double authentication, especially if the user is located in the European Union where the revised Payment Services Directive (PSD2) is implemented and multiple authentications must be performed.

Basically, with the double verification feature, customers will need to first fill in their credit card details and then be redirected to a separate card scheme field. There, they will be asked to enter a one-time code sent to their mobile phone, a permanent password for 3D Secure Services or use a fingerprint, among other things. Whilst this process makes transactions more secure, it can also seem tedious for some customers and increase the risk of them abandoning the cart without completing the purchase.

However, if a customer uses a digital wallet as a payment method, they may be able to skip this inconvenience altogether. Buyers with digital wallets don't have to waste time filling in card details as these are stored in the virtual wallet. They only need to enter the username and password of the wallet.

On the other hand, filling in card details through a payment gateway's form is more secure as the dual identity verification process minimises chargebacks. Payment gateways are also required to comply with the Payment Card Industry Data Security Standard (PCIDSS), which makes them implement certain procedures to keep cardholder data secure.

Meanwhile, digital wallets are using encryption to protect users' personal data. However, certain factors can undermine it, such as unprotected Internet connections or weak passwords on personal devices.

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