Digital Wallet Technology - Using Digital Wallets

USING DIGITAL WALLETS

Digital wallets were heralded as one of the technological innovations that would help fulfill the promise of ultimate shopping convenience afforded by e-commerce. While online shoppers needn't wait in long lines or sit in traffic to make their purchases, the long and often convoluted form-filling process required in order to make a purchase online using a credit card number kept e-commerce from achieving the prominence that e-merchants had counted on. In 1999 the research firm Jupiter Communications reported that 27 percent of all customers who began placing an order online actually abandoned the process, primarily due to the amount of time and confusion involved in completing an online order, not to mention the fears involved in transferring credit card information over the Internet. Therefore, digital wallets were positioned to take e-commerce to the next level of penetration by easing the entire process and making individuals comfortable about sending their purchase orders over the Internet.

With digital wallets, customers could forego the process of filling out lengthy order forms each time they made an online purchase. Rather, they could simply activate the wallet to automatically and securely fill out the required information fields, including the customer's name, credit card number and expiration date, and billing and shipping information. When an online shopper is ready to make his or her purchase, he or she simply clicks on the digital wallet, which automatically fills out the entire order form and transmits the information to the online merchant. The wallet is then updated to reflect the most recent purchase.

Thus, digital wallets don't actually store cash as real wallets do. In 1999 Forrester Research reported that, while 100 percent of U.S. Internet retail outlets accepted credit cards, only 14 percent accepted alternative payment methods, such as debit cards. Digital wallets came about to exploit that framework rather than try to usher in completely new forms of Internet-based payment systems (such as digital cash) with which customers may not have been familiar or comfortable. So rather than overhaul the entire payment system, digital wallet vendors worked only to try to make the existing dominant payment method more user-friendly. Primarily, they facilitate what is known as one-click shopping, saving customers from having to repeatedly enter in the same information for each purchase.

Typically, digital wallets also allow customers to store preferences for Web sites and purchases, thereby allowing the merchants that support the wallet to personalize their offerings and notify the customer of special sales and new products. Moreover, when the digital wallet enters the required information in its appropriate fields, it automatically encrypts the data. In this way, customers can rely on an encryption system maintained by a company whose technology they already are familiar with, rather than relying on the security of the encryption systems of many different merchants.