Using Digital Wallets Vs. Bank Cards Pros and Cons

  • January 24, 2022
  • 10 minutes read

Index

Have you ever used a digital wallet? If you have used it, do you think it is better than debit or credit cards? With the growing popularity of mobile wallets, traditional credit/debit cards are being taken over by this new invention. 

Digital wallets are a great innovation that is shaking up the world of banking. It has brought to the table many new features that make it stand out compared to traditional cards. It has led to the growth of contactless payments in the UAE, which now accounts for 13% of the total payments as a key player, compared to the initial 10%. 

However, nothing has a hundred percent efficiency, and digital wallets are no exception. They have some downsides that credit/debit cards might cover. So let us look at using digital wallets vs bank cards Pros and Cons. 

The Pros of Using Digital Wallets Over Debit Cards

Many people prefer using credit/debits over digital wallets, and we mean, change is hard. However, using e-wallets has a lot of advantages compared to debit cards. Hence the massive growth of the number of users throughout the year. As a result, e-wallets are expected to grow their CAGR to around 32% percent between 2017 and 2022.

So here are some benefits that make digital wallets more efficient compared to credit/debit cards.

Enhanced security

How many times have you found your wallet missing, containing your debit or credit card? It happens to people all the time; in most cases, the wallet is usually stolen. Digital wallets enhance security in a big way. Yes, phones also get stolen or lost at times, but unlike wallets and debit/credit cards, you are required to go through a considerable process to access a stolen phone’s content.

Phones have features such as biometrics and face authentication, which provide top-notch security. Credit cards do not offer these features. In addition, the cloud also supports e-wallets. This enables you to access your e-wallet even on a new phone. 

E-wallets also provide enhanced security when transferring money. They use an algorithm that generates random codes for payments and real-time OTPs during online transactions or in stores.

Digital wallets such as payit, which is the first fully-featured e-wallet mobile application in UAE, have extra authentication features. They have their own passwords that should be used to complete a transaction. You also cannot access any account without confirming your identity, making these e-wallets more secure. 

payit is also accessible 24/7; it saves you the stress of carrying around money in the night when it is not safe.

Cost 

Sometimes e-wallets incur a fee for some transactions. For example, reloading prepaid cards from various sources costs a reasonable amount of money. However, all the other costs, for example, the transfer of funds to a different account, cost only a small amount of money. The amount of money is so low that it compensates for the amount spent to reload cash. For example, if you are in UAE, you will find using payit to transfer money relatively cheap.

With the growing economy, this is a very advantageous feature. People are mainly using credit cards to pay for services and products to avoid carrying cash around. However, the cost of credit card transactions is higher than that of e-wallet translations when you factor in all the fees and taxes. Once you calculate the average amount of money you spend transacting using a credit/debit and compare it with the amount you spend using an e-wallet, you will note that the gap is enormous. You also save up on a couple of scenarios too which include: Also or too, not both.

  1. Credit card replacement – AED 25
  2. Debit card replacement – AED 50
  3. Paper statement – AED 5

All these costs are freed when you operate using an e-wallet. For instance, your e-wallet is saved in the cloud, so you can never lose. In addition, paper statements are provided to you for free while using payit in soft copy, which is quite portable since you can simply mail them to your client at no extra cost.

A lot of services

E-wallets offer a lot of services that make your day-to-day transactional activities efficient. For example, when using credit cards, you only get to transact money. However, using mobile wallets, you get more than transactions. You get to manage your account as well. payit provides services that help you manage your account in the comfort of your home. What is more, they offer free collection solutions for clients who have subscriptions or memberships. 

payit also offers a variety of transaction options which range from paying bills to paying for your shopping. For example, with payit, you get to pay your children’s school fees at the comfort of your home.

Also, you can pay your domestic workers quickly. The app has a feature that allows subscribed users to pay their domestic workers conveniently. All you have to do is make some verifications about the people you want to pay, and you are all set.

Multiple card selection

Have you ever been in a situation whereby you want to use a specific card to make a payment, but you left that card at home? When using an e-wallet, you do not have to worry about such an occurrence. E-wallets support multiple cards, so you get to choose whichever card you want to use at whichever time you want. 

This feature, which is also available in payit, helps you when you have a gift card or a coupon on a specific card. You can access it and enjoy those discounts whenever you get the chance.

Seamless payment

Making purchases using cash money can be hectic, especially when the payment is substantial. E-wallets help you save up on time and carry a lot of cash. All you have to do is insert the needed details at any store, and you are good to go.

Moreover, payit has an extra feature whereby you can scan a QR code to make an instant payment. This makes the payment process easier and quite efficient. This feature is not available when you are using a credit/debit card. 

It also helps you reduce the bulk that could have been accumulated if you carried around a lot of cash or cards. 

Reduces the number of places where your card numbers are stored

If you are a fan of shopping online, you have come across sites that offer to save your card information for future payments. When you have multiple sites that have saved information about your cards, it poses a threat to the cards’ safety. If the company gets hacked, then your card information can be exposed.

We mean, identity theft is growing in the UAE. In 2014 alone, the government noted an 

88% increase in cyber-crime in the UAE. This number raised the alarm to those using debit/credit cards in the Region. The number since then has not escalated, proving that identity theft is here to stay.

However, when you use e-wallets such as payit, your information is only stored in one application that you can use across various stores and platforms. So when you make any transaction, the retailer will not even know your card number, and your payment information will stay safe.

Now that we have seen the many pros of using e-wallets over cards let us dive into the cons.

Cons of Using Digital Wallets Over Credit/Debit Cards

Although e-wallets are pretty efficient, they have some flaws too. Here are some cons that make cards stand out in some situations:

Compatibility

Some organizations do not accept payments made from e-wallets, although they accept cash and maybe cards. As a result, you might end up stranded if you are not carrying cards or cash at the time of purchase.

The problem can only be solved if organizations integrated e-wallet payments into their system. With the growing popularity of digital-wallets, we are sure that organizations will have to integrate them, which will no longer be an issue.

In some situations, only one e-wallet will be accepted by a particular organization. If this happens, you will have to use an alternative payment method since your e-wallet is not accepted at this location. However, payit is accepted in many organizations, so you do not have to worry about this happening if you are in the UAE.

Budgeting issues 

Having all your cards at your disposal can tempt you into going over budget. However, they are also designed to offer seamless money transfers, which means that you get to spend money quickly. Therefore, if you do not plan your purchases and budget, you might end up spending more than you intended.

payit has tried to deal with this issue by bringing in a new feature whereby you get an alert each time you spend a lot of money. This helps keep you aware of your expenses to avoid overspending.

Card and digital wallet compatibility

For a card to be accepted by an e-wallet, the two companies have to have a relation. This poses an issue as some cards are left out when adding them into e-wallets. To find out if your card is accepted by a particular e-wallet, all you have to do is add it. The process should only take a few minutes to allow your e-wallet to authorize payment through the card. If the card doesn’t work, you will automatically know that this card does not work with this wallet.

Using payit, you get a lot of card options from many UAE banks. Hence, you are most likely not going to suffer from this con when using the card in the UAE.

Dead phone batter

Imagine needing to make a payment and finding out your phone is dead. Since all your information is only accessible via your phone, you will end up stranded in this scenario. This is why it is always a good idea to ensure your phone is sufficiently charged if you plan to use it to make purchases. You can also carry a power bank to back you up in case such a case occurs.

Conclusion

Digital wallets are the up-and-coming method of making transactions. With all the extra features that they offer, it is evident that e-wallets are here to stay. If you are thinking about creating an e-wallet account, we would highly recommend that you do. I mean, if it makes life easier, then we should be all in.

Get your digital wallet app. now

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