What is E Wallet and How Does it Work [Case Study Included]

What is E Wallet and How Does it Work [Case Study Included]

Since the popularization of the Internet, consumers have been steadily moving their purchases online. Today, with the abundance of digital stores and payment systems, traditional payment methods look almost archaic. 

Nevertheless, while an average user will likely know how e wallet works, for developers it may still be a challenging task – simply because of how many boxes they tick in the “requirements” section. To help you out with the development of a perfect wallet app, here is a comprehensive guide from Swag Softs’ team.

What is E Wallet and How Does it Work?

A digital wallet app, also referred to as an e-wallet, is an app that allows making digital payments from your phone. With the rise of mobile banking and m-commerce, the demand for a convenient way of managing funds and paying online has given a massive boost to the emergence of this niche in app development. Nowadays, there are several varieties of mobile wallets, each with its own set of features and approach to processing transactions. The most common ones are:

  1. Apps provided by payment services or banks that handle their own funds
  2. Apps that manage payments from credit cards of other payment services
  3. Apps that improve the shopping experience by informing about discounts and loyalty programs

In other words, the answer to “What is a mobile wallet?” will be different depending on what is the wallet app you are using. However, as electronic payment apps become more advanced and feature-rich, these distinctions are getting increasingly blurry, so on a user level there may be no noticeable differences between different types of mobile wallets.

Benefits of E Wallet

Mobile wallets offer a range of benefits to its users. Some stem from the capabilities of digital devices and infrastructure like cloud technologies to increase performance, others capitalize on connectivity to provide timely updates. Below are some of the most noteworthy e wallet advantages.


The most obvious advantage that differentiates mobile wallets not only from physical alternatives but even from other digital counterparts like desktop applications. With phones being essentially everyday carry items, it only makes sense to equip them with an app that would provide access to essential financial operations at all times.


Traditional financial institutions have a long-standing reputation of being tediously difficult and time-consuming to work with. In contrast, wallet apps allow performing even relatively complex operations in a few taps and seeing results immediately. Not only that, they provide access to all sorts of convenient features like expense tracking and smart tooltips, which makes fund management simpler and more intuitive.

The convenience-related benefits can even go beyond the core functionality of the service. For instance, a wallet app may allow importing cards and credentials of external services, which is particularly helpful if you want to get rid of countless plastic rectangles in your pocket. Finally, mobile wallets often support many types of operations, such as paying for utilities, which makes them a Swiss army knife of transactions.


Any technology entrusted with funds management is an obvious target for cybercriminals. Fortunately, modern digital solutions allow for a solid level of protection against malicious activities. Mobile wallet apps are actually on the forefront of this movement, often incorporating multiple security layers, including:

  • Passwords
  • Fingerprint checks
  • Face identification
  • Two-factor authentication

On top of that, mobile apps are also protected by the phone’s integrated security systems (unless, of course, the user chooses to disable them), which makes them even safer. Finally, digital wallets provide confidentiality and privacy that is not available for other forms of payment, so your personal data is safe both from malicious activities and prying eyes.

Overall Experience

Digital payment services usually have a variety of rewards to choose from. Digital wallets make it easier to see and use these rewards. Besides, the software itself will offer various tweaks that enhance user experience and make interactions with the app feel more rewarding.

Mobile Wallet Challenges

wallet app for android

To be fair, the benefits listed above are only relevant for polished and mature products. In terms of development, they actually pose a lot of challenges. So, for those wondering how to start e wallet business, here are some of the most important aspects to keep in mind from the start.

Security Considerations

However counter-intuitive this may sound, security is both the main strength and the main barrier to the success of electronic payment apps. Because they are such desirable targets, wallets are under constant assault by cybercriminals. Some of the threats, like code vulnerabilities, need to be solved on a technical level, others must eliminate the possibility of fraud through social engineering. Mobile wallets should also have mechanisms for account recovery and detection of suspicious activities.

Regulatory Constraints

Digital wallets still deal with a very real and heavily regulated asset – money. This means they need to comply with financial regulations of a jurisdiction they operate under. For apps that are meant to be used internationally, the issue becomes even more complicated and may introduce additional barriers to the development process.

Transaction Management

For some digital wallets, like those of banks, transactions are managed by the organization that maintains the app. In other cases, this task has to be delegated to external parties. These actors often have their own operating conditions that may interfere with the product’s functionality. These may include:

  • Long transaction times
  • Low transparency of operations
  • Hidden fees
  • Restrictive transaction limits
  • Feature limitations (e.g., inability to cancel an erroneous transaction)

In this light, finding the right partner is as important as writing efficient code.

High Entry Barrier

Despite massive progress made in the field of UI design, mobile wallets can be difficult and unintuitive to use. In addition to financial operations being complex, the app needs to be accessible to a diverse demographic, which poses a number of challenges in its own right.


Mobile wallets’ functionality depends on Internet connection for most of its features. This leads to a situation where some apps will simply not launch as long as the phone is offline. This may become problematic for uses in regions with poor network coverage. At the same time, for some features, the connection is not critical:

  • Ledger and receipts
  • Last known balance
  • Expense tracking
  • Payment scheduling

So it is critical for developers to try and retain the functionality of features that do not fully depend on the Internet.

Consumer Trust

While most virtual wallet apps have state-of-the-art security systems, the popular perception is slow at catching up. And, while the coverage of cybercrime-related topics in the media does promote public awareness, it also has an adverse psychological effect. No matter how technologically sophisticated the app is, its adoption will still depend on trust, so developers need to find ways to communicate confidence to users.

Mobile Wallet: Essential Features

virtual wallet apps

To satisfy the expectations of users, an e-wallet has to take advantage of the phone’s features. Some of these, like location awareness, are nifty quality-of-life improvements while others, like the NFC, are an essential part of a successful e wallet project.

(What is) NFC Technology

Perhaps the most important component on the list, so figuring out how does NFC technology work is inevitable if you want to know what is wallet app. NFC, which stands for near-field communication, is a technology for wireless communication between devices on short distances. For a payment system, this is a fast, convenient, and secure way to exchange identity data simply by bringing it close to a POS terminal. Phones with NFC technology are increasingly common nowadays, so ignoring this feature will cost you a solid chunk of the user base.

Bluetooth and iBeacons

Bluetooth and the iBeacon technology based on it are very similar to NFC in that they allow the wallet app to communicate wirelessly with nearby devices. However, unlike the NFC, which has a reach of two inches at best, Bluetooth has a range of up to 200 ft. This is certainly an overkill for payment verification but works perfectly for targeted promotions and similar marketing techniques.

QR Codes

Another familiar technology that is easy to implement and convenient to have around. It relies on image recognition to decipher information encoded in a rectangular code. Not only does it eliminate the tedium of entering long strings of information manually, a QR code also broadens the range of application of a wallet app, allowing it to read from any printed media.

Location Awareness

While far less accurate than other options mentioned here, location awareness still can benefit the e-wallet in several ways. For example, when a user wants to split the bill with friends, the app can detect people from the contact list based on their proximity and make the process more seamless.

Case Study: VBS Health

new wallet app

Swag Soft’s experience with wallet app development is best demonstrated by VBS Health – a mobile payment platform for one of the leading food and beverage companies in Singapore. The main purpose of the app is to provide convenient payment options. However, it also offers concise information on the health benefits of selected products, helping to make an informed decision and fostering trust with the company.

VBS Health relies on QR code technology to scan the code on the POS screen, which enables offline functionality. On top of that, it has a referral program that rewards active users with extra credits. The seamless user experience achieved through simplicity and reliability of the app make it one of the most successful development projects by Swag Soft.

How to Create E Wallet: Important Steps

Considering all of the above, the development of a good wallet app for Android will involve a lot of planning and careful consideration. Overlooking an important aspect of development will introduce additional expenses and can slow the project down to a halt. Here are three of many critical points you would not want to miss:

  1. Choosing a platform: Android and iOS are two giants of mobile commerce, each with its fair share of profits in the market and intricacies of app development and distribution. Taking on both may prove too ambitious of an undertaking, whereas choosing the wrong one means greater expenses, so choose wisely.
  2. Target audience: A wallet app has one of the most diverse audiences, which may be great for revenue generation but a real challenge for developers. Don’t skip on proper research and establish channels of communication to make your customers’ voices heard.
  3. Registration: Something as trivial as a registration process can make a critical difference when it comes to an app in charge of someone’s funds. In addition to saving valuable time, it may help keep customers safe from fraud.

E Wallet Development Tips

Finally, here are some tips that you might find helpful. These are not critical aspects of the e wallet – rather, they are opportunities to enhance customer experience and popularize the app.

Create widgets: These are small elements that extend the app’s functionality. In the case of a wallet app, widgets offer considerable value, be it through real-time updates or by serving as shortcuts to obscure features. Having them around will make the app more intuitive and easy to use.

Gamify: App gamification is strongly associated with entertainment (perhaps rightfully so), which makes it a seemingly poor fit for a “serious” financial application. In reality, it can become a great way to foster engagement with the app by encouraging the discovery of new features and helping users understand how does mobile wallet work.

Build trust: The popularity of an e wallet depends on the users’ perception of its security, so winning the audience’s trust is a crucial first step. However, it also works the other way round – a good mobile app can increase brand loyalty, either by being a part of marketing strategy or simply by exceeding expectations. Make sure the app’s design aligns with your brand’s aesthetics and the company’s vision.

Wrapping Up

Mobile wallets are deceptively simple. On the user’s end, they are meant to be as intuitive and unintrusive as possible. However, there is a lot going on under the hood, both on a technical and financial level. The VBS Health app is just one example of an elegant solution to this challenge, and there are certainly many more routes to success. With a thoughtful approach and a team of experienced developers, a convenient and trustworthy payment service well may be the final puzzle piece on the road to success.