The Evolution of the Digital Wallet – A Look Into Its Past & Future

It has been described as the future of payments. The digital wallet (commonly known as the e-wallet) essentially lets users store all their cards, bank account, and financial necessities in a virtual system. In addition to that, a digital wallet also allows people to make any digital payment from their mobile device.

How did e-wallet make its way into our lives and how did it become the primary payment method for so many people?

How does it remain such a prominent part of the digitisation and digital transformation happening in this era and what’s in store for its future?

What is a digital wallet?


In a nutshell, the digital wallet works a lot like your physical wallet, with the only exception being that it’s an entirely electronic version of the same concept. It lets people store their money and make payments all from the comfort of their homes through a mobile app. It’s essentially a virtual mobile bank at your fingertips.

Digital wallets these days are also reinforced with security measures , so your personal information can be kept safe during transactions. The perks of having a virtual wallet system also mean that all your personal information is protected since no physical receipts containing your payment information are being produced.

This remarkable innovation provides us with accessibility and convenience, offering loads of features all from our smartphones. The onset of the COVID-19 pandemic also served to increase the usage of digital wallets due to its benefit of offering contactless payment. There are various types of digital wallets available, each with its own unique set of features.

Mysterious Beginnings

digital wallet,virtual,contactless payment,digital transaction

For all the attention given to the digital wallet, its origins are pretty murky. The very first instance of an e-wallet can’t exactly be pinned down. What’s known is that the idea had been in circulation since the late ‘90s, with discussions about a concept made up of virtual payment systems and capabilities for storing cash outside of a bank account or debit card/credit card. However, very few people were using it at the time.

In fact, several companies and individuals tried to come up with early versions of the e-wallet but nothing much came out of it. Even eBay launched a series of early e-payment programs but these failed to take off due to poor publicity. Ultimately, the timing just wasn’t right.

E-wallets Took Time To Conceptualise

The first series of e-wallets that was developed was basically considered a failure and is now known as the first generation. The second generation garnered a little more traction, with even MasterCard and Visa coming on board. However, there just wasn’t enough focus on simplification, and integration of solutions was practically nonexistent.

It took roughly two decades and a full technological revolution to turn things around. Paypal was one of the earliest pioneers of the virtual wallet system in America, and with the introduction of their PayPal app, customers were starting to get eased into the novelty that was digital wallets. Now, e-wallets are back with a vengeance, incorporating full-fledged integration, solid security features, and an extended range of potential applications.

The e-wallet as we know it today is a secure system that can store payment information from as many cards as you want (credit card, debit card, etc.) and can remember passwords for exchanges from all the websites you engage with. Transactions are fluid and cryptocurrency can be used. Businesses can capitalise on new developments as finance and technology become increasingly intertwined by making a firm commitment to system modernisation.

The Current Climate For E-Wallets

Person-to-person (P2P) payments use mobile applications to move funds from debit or credit card networks and other financial institutions. These can be used to conduct transactions. Person-to-Business (P2B) payments – use a list of systems to transfer payments between a user’s mobile device and a business’s account.

Banks are getting on board too, with initiatives like Zelle . This digital payments network is owned by some of the largest banks. Zelle lets users transfer funds directly into bank accounts. Private tech giants like Samsung, Apple, and Google, are already paving the way with their very own digital wallets, such as Samsung Pay, Google Pay, Apple Pay, Amazon Pay, alongside many other similar digital wallet provider. These models let consumers interact with a massive list of merchants. Even retailers and consumer brands like Starbucks and Walmart are getting in on the action, with their very own digital wallet app designed to cater to their customers.

The Future Lies In Asia

You’ve probably already heard about the massive integration of cashless payment that’s taken place in China. Nationwide, consumers, merchants, banks, and institutions can be found implementing e-wallets and cashless payment systems to cater to a demand for paperless and more seamless mobile payments. WeChat Pay and Apple Wallet have emerged as the leading digital wallet providers in China, and it is used by a large majority of the population.

However, there is yet another region that’s stepping up its digital wallet payment game; Southeast Asia. When it comes to embracing the mobile economy, it has already outpaced China. This trend has been driven mostly by the rapid adoption of digital wallets.

From FinTech firms and startups to banks, telecommunications companies, and even consumers themselves, there are so many players behind this growing movement. E-wallets are being equipped with so much more power than before, and other concepts like the robo-advisor, insurtech, micro-loans, and digital remittance are all being integrated with the smartphone. Cross-border e-money usage can lure in adoption among travelers, provided the exchange rate is favourable and the wallet size limit (the limit on the amount that can be deposited into an e-wallet) is set relatively higher (in the range of USD 5,000).

Collaboration Is Inevitable

In order to truly witness a huge transition going forward (from cash usage to mobile payments), e-wallets should collaborate and form partnerships with the traditional banking infrastructure. Existing service providers aren’t out of the game yet, and they bring the opportunity for e-wallets to extend their capabilities. Mobile wallet features could lean towards cross-border remittances and foreign exchange. A truly borderless payment shift could happen in the near future. However, these players should be willing to work together. One great example of collaboration can be found in the partnership between Valyou and Mutual Trust Bank (MTB).

This collaboration offers a first-of-its-kind wallet-to-wallet remittance integration that lets migrant workers in Malaysia transfer money directly to bKash accounts in Bangladesh through an innovative Valyou Mobile Wallet app. The true power of digital transaction via e-wallets can be unleashed by enabling a society that’s highly connected. Simple transactions like buying a coffee should have sophisticated networks of service providers and optimised components working seamlessly and in an instantaneous fashion.

Unanswered Questions?

Even now, there are still plenty of questions about the digital wallet revolution that haven’t been answered as of yet. For instance, an aspect of digital payments and e-wallets that often gets overlooked can be found in the beneficiary side of things. Questions like; “what happens to the money in an e-wallet if a next-of-kin beneficiary is not nominated, or if they are unaware of the deceased’s e-wallet?”

There’s no simple answer to questions like this, seeing that digital assets often come in a wide range of forms. With regard to cryptocurrencies like Bitcoin, beneficiary processes can be tricky in the event of sudden death because cryptocurrencies are highly secure and encrypted by their nature. On the other hand, online bank accounts may be slightly easier to deal with depending on the service provider and the security measures put in place.

This goes to show that as far as we’ve gotten with digital payments, there is still a lot of work to be done.