A cloud digital wallet is a software-based system that securely stores your personal and financial information, allowing you to make transactions online, in-store, and in-app. When you enter your payment information into a digital wallet, the software encrypts and stores the data. The very difference between the traditional in-house server-located solution and this type of software is that it is deployed on the cloud.
There are many different types of digital wallets available, each with its own set of features. The basic default cores of digital wallets allow the building of various solutions with different functionality. The leading part of the cloud digital wallets makes possible integrations with e-commerce platforms, payment and service providers, or CRMs. So, there are several key functionality blocks that could be adjusted into an active business workflow:
- Account creation and management;
- P2P payments and within-ecosystem transactions;
- FIAT and cryptocurrency management on the private accounts;
- Third-party vendor integration;
- Back-office ecosystem management;
- Cross-platform excess to the ecosystem;
- Multi-asset ledgering of the business dataflow.
Digital wallets are becoming increasingly popular in e-commerce as they offer a convenient way to pay for goods and services without having to carry around physical cash or credit cards. Such software also gives an additional layer to customer retention and communication, directly influencing the LTV and Break-even points metrics. They also provide an extra layer of security as your payment information is encrypted when it is stored in the digital wallet.
What are the Benefits of Cloud Digital Wallets for Clients?
Digital wallets are electronic versions of traditional wallets that store your financial information, such as credit and debit card numbers, in a secure online account. Many digital wallet providers also offer additional features, such as the ability to store loyalty cards, coupons, and other types of information.
There are several benefits of using a digital wallet over a traditional one. First, it can help you keep track of your finances by storing all of your financial information in one place. Second, it can help you make purchases more securely by allowing you to pay with your credit or debit card without having to enter your card number or personal information. Finally, many digital wallet providers offer additional features that can make shopping and managing your finances easier and more convenient.
Are Traditional Digital Wallets More Secure than On-Cloud Versions?
There are different types of architecture and overall approaches toward wallet creation. Some of them, like open-code or low-code products, have certain historical breaches. Think about this as the historical native development of the solution. Its core may be 10-15 years old with certain outdated practices of the product development lifecycle and tech stack.
The errors and insecurities pile up and are there to be breached. Even more, the software of the wallet does not cover all the integrations and business needs your company may naturally have. So, these basic settings of poor coding and development build up with the issues on the third-party providers’ side.
Modern versions of the digital wallets are mostly secure by their design unless they have some old multi-asset ledgering inside. Such wallet composition allows updating of the module or the core without all business process disruption. Now, they moved from Java EE to a more modern stack and updated the core for their previous clients without making them rework their API integrations with tens or maybe hundreds of endpoints.
So, from their perspective, the question is not on the way their product is deployed, but on the way, it is designed. The cloud wallet based on the modern stack is most likely an infrastructure-agnostic product. It means that it is either a cloud or in-house solution, running the AWS, Azure, or any other popular server setup. The deployment type does not indicate the level of security, but the flexibility in possible deployment indicates the fact whether this or that version is more or less secure.