A digital wallet is an electronic device, app, or online service that allows electronic financial transfers between two parties. As the world becomes more digitized and mobile, the growth of digital wallets has boomed. Most smartphones are already equipped with phone-specific digital wallets (e.g., Apple Wallet), or consumers can pick from a selection of peer-to-peer payment apps (e.g., Zelle), Bitcoin wallet apps (e.g., Mobi), and credit card or bank wallet apps (e.g., Chase Pay). Users can utilize the apps to make purchases in-store, in-app, or while shopping on the web. Retailers must have the necessary card readers to accept digital payments. Many wallet apps have the added convenience of storing loyalty cards, plane tickets, event tickets, and more. Digital payments are often faster and more secure than traditional payment methods, and, by not holding cash or physical cards, consumers can protect themselves against theft and fraud. Despite these advantages, more than half of consumers don't trust the technology, according to a survey by Experian. Only 13 percent of Americans use digital wallets on a weekly basis. One way consumers can add an additional layer of protection is to use multi- or two-factor authentication on their mobile device. Mobile payment adoption in the United States has been slow; however, this has not been the case worldwide. In China, for example, nearly half of all in-store purchases are made with digital wallets. This is due to the Chinese government's active role in creating a digital financial infrastructure. The country is developing a digital currency that is backed by its central bank. Companies such as Alipay and WeChat Pay are growing throughout Asia and stand to be major competitors worldwide as the companies globalize. While digital wallets have seen great growth, it's too soon to say goodbye to traditional payment methods. One reason is that not all businesses have adopted technology to accept payments from digital wallets. Countries that are deeply invested in legacy payment systems, such as the United States and Europe, will have to play catch up with countries that have quickly developed and adopted digital payment systems such as China and India. However, as more and more consumers adopt the technology, more businesses will follow in order to accept these types of payments.

Questions:

Do you think digital wallets will revolutionize electronic banking and in-store transactions?

How do you think digital wallets will affect traditional banks?

What are some of the risks of digital wallets? What can be done to mitigate these risks?