How to Create a Digital Wallet and Monetize Its Harnessing

Our everyday shopping now revolves around making payments online. E-wallet can streamline people’s money management and improve the whole payment processing approach, whether users are shopping in-store, online, or within apps. 

However, the financial-related apps creation is much more complicated than any usual commercial application. As an entrepreneur, you have to be aware of the regulations of different countries related to financial laws and restrictions on software distribution.

In this guide, we will explore the key elements of how to create a digital wallet, including the technological stack, security, examples, development methods, and top features.

The Digital Wallet's Nature

Prior to discussing more complicated terms, let us determinate the basic concepts related to the guidance on how to create a digital wallet app. Digital wallet is a great tool for your existed business or as an independent project with which users can store the payment cards, bank accounts, cryptocurrency and other financial information for online and offline payments. It allows making easy and fast purchases, pay for services and transfer money to other users without having to carry physical cards or cash. As a well-experienced company we know that the variety of the digital wallet’s use is enormous, so, answering the question on how to develop an e-wallet app and to make a choice on what payment system do you need to develop, you have to rely on two main factors of difference: the purpose of your service existence and the operating principles.

For your convenience, below we have provided key concepts in a user-friendly infographic.

Differences in Purpose of Operation

Choose whether your mobile wallet will be primarily used for payments, loyalty programs, or other features. To learn about the wants and needs of your target audience, do in-depth market research. You may create distinctive features that make your app stand out by analyzing your competition to determine their advantages and disadvantages.

Closed services are created for a certain company/restaurant/shop/etc. and usually limited to one company’s network. These applications' primary goals are to increase client loyalty and promote purchases from particular businesses. They have the advantage of being able to be tailored to the particular requirements of a company and improved security because they aren't connected to consumers' credit cards or bank accounts. For example, we created the POS integration for the global restaurant brand app that provides the deal activation by QR or numeric code at the checkout desk or the order counter.

Semi closed ones provide their services to a variety of retailers and locales while balancing closed and completely open wallets, such as credit or debit cards.

The benefit of semi loop wallets is their greater adaptability, which enables transactions at more businesses. They might not provide the same degree of security as the closed one because they are part of a larger financial services network.

Fully open services offer the greatest degree of freedom, allowing purchases to be made at any retailer that takes the related payment method. They work anywhere such payments are accepted and are not limited to any one retailer or e-commerce site. Unmatched convenience is provided by open e-wallets, which may also have extra features like reward points accumulation and cost tracking. It's important to remember, though, that they can provide greater security dangers than other kinds of digital wallets.

Crypto wallets. Speaking about how to make a digital wallet, we couldn't skip the info that will help you to create cryptocurrency management tools to facilitate trading and staking. Since people are more engaged on mobile devices, cryptocurrency wallets are moving there. Crypto features are frequently included in well-known open wallets in an effort to draw and keep customers.

Differences in Technologies of Operation

Among virtual wallets, three main types of payment/transfer of account or account data are popular. The choice often depends on the preferred type of payment: online or offline. Some types are physically impossible to perform online, so if your system involves online transactions, in addition to standard bank transfers, it is worth considering the method of payments through QR code.

QR, or quick response, is the eldest technology from the following in our list. Unequivocally, you have met this type of code image on advertising posters, brochures, or on the product's package. This is a type of matrix code that contains encoded information available for quick scanning throw the camera. QR codes are convenient due to their compactness, damage resistance and ability to quickly provide access to data, including data for payment or bonus points gaining/cancellation. 

NFC, or Near-Field Communication, is a short-range, “touch and go” wireless technology that allows devices supporting this type of information transfer to exchange data between active and passive devices. Mostly-used for the contactless payments, throw the smartphones or smartwatches. Due to the widespread use of this technology, almost all portable devices are now supported with this type of payment.

MST, or Magnetic Secure Transmission, magnetic field-based technology developed by Samsung for contactless data transfer from payment cards. It allows smartphones to transfer payment data to terminals that are supported only by traditional MR cards. This extends the possibilities for contactless payment even if the POS terminal does not support NFC. The terminal «thinks» that it reads data of a regular card, and accepts the transaction.

How to Create a Digital Wallet: The Ways of Getting Incomes

Mobile top-ups, bill payments, e-wallet services, and e-commerce features are some of the main business models that top mobile wallet app providers concentrate on while thinking about “how do I create a digital wallet?” in order to understand how digital wallets generate revenue. Here are the most commonly-utilized ways of getting money from them:

Recharge services. Recharge services are a common way for digital wallet firms to start their income streams. A fee, usually between 2% and 3%, is paid by operators to these providers for each successful recharge made via their platform. For instance, when consumers use digital wallets to recharge their mobile phones, mobile networks are charged these costs.

Payments for bills. Commissions on the payment of different bills, including tuition or utilities, are another way that digital wallet businesses might make money. The digital wallet firm receives payment from service providers for enabling these transactions.

Online purchases. Businesses that provide mobile wallets for online shoppers can make money by keeping a portion of the items' ultimate selling prices. The usual range for this commission is between 0% and 20%.

How to Create a Digital Wallet App: The Main Steps

The main question of this article is how to create a digital wallet app. So, here we are. Below, we discuss the main principles for how to build your own e-wallet and payment system, following which you can be sure that your system developed in the best shape.

1. The Main Goal Definition

The first step in our guide on how to create a digital wallet is to define its main purpose. It is necessary to be clear about what the product will be and what tasks it should solve for users. For the end-users, the main purpose of digital wallet is to simplify and secure the payment process, make it fast, convenient and accessible. It can be a tool for daily transactions, for secure storage of digital assets, or a universal platform that combines several payment systems. Understanding the end goal forms the basis for all future decisions.

2. Market Researching and Unique Functions Determination

Market research helps to understand current trends, needs and expectations of users. The analysis of competitors gives an idea of existing solutions, their strengths and weaknesses, and allows identifying gaps that a new product could fill. It is important to identify the unique features on the initial stages of pondering how to make an e-wallet app so it will distinguish a digital wallet from others and create a competitive advantage.

Main functions of the digital wallet:

1. Registration and login: Registration by phone number, e-mail or social networks. Two-factor authentication (2FA) and biometric authentication support (fingerprint, face recognition).
2. Adding payment cards and bank accounts: Ability to add and store credit and debit card details. Tokenization support for safe storage of card data. Bank account binding for balance replenishment and making payments.
3. Balance and funds management: Display of the current balance for each card or account. Transaction history with filtering and sorting capability.
4. Notifications: Push notifications and messages about successful payments, transfers, entries and attempts to enter the wallet.

Additional digital wallet features:

1. Integration with cryptocurrencies: Ability to store, send and receive cryptocurrency. Display of cryptocurrency exchange rate and conversion into fiat money.
2. Rewards and cashback: Loyalty programs, cashback for purchases, access to special offers and discounts.
3. Investment instruments: The ability to buy shares, bonds or other investment instruments. Display of investment and yield data.
4. Cost and budget analysis: Automatic classification of costs by categories (food, transport, entertainment, etc.). Budget setting and tracking of expenses by categories.
5. Multi-currency account support: Ability to hold funds in different currencies and convert them. Automatic display of currency rates.
6. Chat and customer support: Built-in chat for communicating with customer support. Automatic answers to popular questions.
7. Offline mode: Save data and transactions that are synchronized after connecting to the internet.
8. Additional security measures: Ability to lock the app or card through another trusted device. Suspicious transaction notifications and restriction by region.

3. Technologies Stack Forming

The key to developing a reliable, secure, and adaptable application is selecting the appropriate technological stack. Server infrastructure, a database for safe data storage, and a client component for an easy-to-use interface are all necessary for the creation of a digital wallet. For the client side, you may utilize languages and frameworks like Node.js or Python; for cross-platform compatibility, you can use React Native or Flutter. Utilizing technologies like encryption and tokenization that promote strong security and data protection is also crucial.

4. User Experience and Interface Designing

The success of a digital wallet depends on the ease and simplicity of the interface, so UX/UI development must be carefully thought out. The wallet should be intuitive, with logical navigation and minimal steps to perform basic operations such as payment or transfer. The design should consider the convenience of using on different devices, for example, smartphones and tablets. It is important to test prototypes with users to make sure the interface and functionality are really user-friendly and understandable.

5. Setting up Payment Integration Frameworks

Integration with payment systems is the basis of digital wallet functionality. For this purpose, integration frameworks are created that will allow supporting the connection to different payment services (bank cards, Apple Pay, Google Pay, etc.). It is important to ensure universality so that users can easily transact regardless of the bank or payment system used. This approach requires testing and compliance with all security requirements and certifications.

6. Development with Emphasis on Security and Data Preservation

Security and data protection are key aspects for how to create a digital wallet card. Multi-level security measures are used, including data encryption, tokenization, fraud protection and two-factor authentication. Special attention is paid to protecting personal and financial data of users in order to minimize the risks of hacking and leaks. Compliance with security standards such as PCI DSS strengthens the trust users have in their wallet.

7. A&B Testing and Product Release

Before the product is released, A/B testing is performed to verify all functions, user interface convenience and user satisfaction. Testing helps to identify weaknesses and refine the product before it enters the market. Based on the results of A/B testing, final adjustments are made that make the application convenient and effective. After testing, the product is ready for release, and the marketing promotion and feedback phase begins.

How to Make a Digital Wallet: Possible Pitfalls

Understanding the importance of digital wallets is the primary advantage of understanding how to create an e-wallet app. Although there are certain advantages to developing a mobile wallet, you should be mindful of potential hazards that might significantly affect the success of your product.

• Security: Prevent illegal access to and breaches of sensitive user data, including payment information and personal information, and adhere to privacy and data protection laws. By preventing security breaches, you may steer clear of expensive fines and legal ramifications. Customers are also more inclined to utilize and refer others to your mobile wallet when they believe their data is secure.
• Legal compliance: Providers of digital wallets are subject to regional laws. In order to expand your service globally, you must obtain the necessary permits in each nation and abide by local laws and regulations.
• Device compatibility: To promote acceptance, keep the software updated for both iOS and Android development. 
• Integration with current systems: Apps for digital wallets frequently need to interface with banks and credit card networks, two well-known payment methods. It could be necessary to work with several partners and conduct thorough testing to ensure a smooth integration with these systems.

Conclusion

After discussing all the possible queries about how to make a digital wallet, it is okay if you steel have many questions about this type of services development. The financials is among the most craved-to-be-responsible and complex field in line with construction and medicine. All functions should be implemented to create a convenient and functional digital wallet with high security, which will provide the user both basic needs and access to more complex financial transactions.

If making the own digital wallet is too terrifying for you, don't hesitate to contact Celadonsoft for a qualified consultation obtaining or the collaboration forming.