Digital wallets have been around for some time, but have only recently grown in prominence. This is largely due to a lack of infrastructure previously holding back their widespread adoption. Although smartphone ownership is at an all-time high, with 98% of adults born after 1996 reported to own a smart device, it has been difficult to find physical locations that would accept digital payments at point-of-sale using a smartphone outside of major cities. Popular mobile wallets such as Apple Pay and Google Pay have led the charge for NFC enabled transactions to take place in brick-and-mortar locations.
HSBC announced on the 18th of May that they have launched a multi-currency digital wallet to allow businesses to send and receive money across multiple regions while only requiring a single account. The HSBC Global Wallet is the bank’s first foray into the world of digital wallets and Fintech, seeking to follow in the footsteps of start-up banks such as Revolut and Starling. Those challenger banks have been early adopters of this payment format and have left traditional financial institutions looking to recover lost ground and market share in this area. One of the main benefits to mobile wallet usage is the ability to authorise and send payments anywhere in the world without service fees.
While some may ask whether HSBC is a little too late to the party, the fact remains that despite the popular uptake of alternative “app” banks in the wake of the 2007 financial crisis, the majority of people still prefer to do their banking with the largest established names in the market. HSBC alone represents nearly $3 billion in global assets and serves a customer base of 54 million people; as such, this news will be met positively from patrons of the bank hitherto frustrated by its lack of innovation around Fintech. The Global Wallet will eliminate some of the major concerns small businesses have with international commerce, chiefly the fluctuation of exchange rates and payment speeds.
There are many reasons why digital wallets are perceived to be a superior alternative to the traditional media of cash and cards. For one, they boast unparalleled security as they operate as an encrypted secure data vault on your phone safeguarded by biometric authentication. This means that it is virtually impossible for someone to commit opportunistic fraud with your digital wallet, even if they had possession of your phone. In addition to this, the ease-of-access and convenience is a distinguishing feature of mobile wallets. The loss of a physical wallet is a stressful and time-consuming process necessitating the cancellation and re-ordering of your individual cash cards. This is not the case for digital wallets that can be accessed from any device and anywhere in the world, provided you are in possession of the relevant security factors.
Another area where digital wallets demonstrate a notable advantage over traditional payment methods is in their direct integration with your bank accounts. Should you make a purchase using a digital wallet, be that online or in a physical location, the wallet will reflect the payment instantaneously. This enables you to keep track of your spending in real time. Many mobile wallets take this a step further and offer a robust feature set to help you manage your personal finances. These include the ability to set budgets and identify spending behaviours. Many include the option to sort your transactions, enabling you to see how much you have spent on a particular category, for example, on groceries or bills. This readily available information gives users greater awareness of their financial activity, empowering them to manage their finances with confidence.
