The Essential Things To Know Before Starting A Digital Wallet Business

The world is quickly embracing the digital age, and e-wallets are becoming an increasingly popular way to send and receive payments. They help users to store their money and other digital assets in a secure environment. E-wallets also enable customers to conduct financial transactions with ease and convenience.

Digital wallets have become increasingly popular in recent years, with more and more consumers adopting this payment method. The global mobile payment market size was valued at $1.48 trillion in 2019, and is projected to reach $12.06 trillion by 2027, growing at a CAGR of 30.1% from 2020 to 2027, according to Allied Market Research survey. 

Starting a digital wallet business can be a great way to open up new revenue opportunities and get benefits of these payment software. In this article, we’ll cover the main things to know before starting a digital wallet business.

What is a digital wallet?

A digital wallet business is an online platform that allows users to store and transfer digital assets such as money, cryptocurrency, and other digital assets. This type of business is becoming increasingly popular as more people embrace the digital age and its associated technologies.

Digital wallets are secure, convenient, and provide users with greater control over their finances. They also make it easier for businesses to accept payments and receive payments from customers. By starting a digital wallet business, you can tap into this growing market and provide users with a convenient, secure platform to store and manage their digital assets.

Check this article about digital and mobile wallet use cases to explore the opportunities for integrating e-wallet software into payment businesses.

Benefits of a digital wallet for business

Starting a digital wallet business offers a number of benefits. We highlight the main advantages e-wallet can offer for payment companies:

Convenience

Digital wallets provide a convenient and secure way for customers to make payments. Customers can easily store their payment information in their digital wallet and use it to make transactions without the need to carry cash or a physical card.

Increased sales

By offering digital wallet payments, businesses can attract new customers who prefer to pay digitally. Additionally, digital wallets can offer a more streamlined checkout experience, reducing the chances of cart abandonment and increasing sales.

Reduced fraud

Digital wallets use advanced security features, such as encryption and two-factor authentication, to protect user data and prevent fraud. This can reduce the risk of chargebacks and disputes, which can be costly for businesses.

Improved customer loyalty

Digital wallets can offer loyalty programs and rewards, which can incentivize customers to return and make repeat purchases. Additionally, businesses can use data from digital wallets to offer personalized promotions and discounts, which can further increase customer loyalty.

Read our article on FinTech architecture to explore key trends, challenges and solutions for financial software development.

Cost savings

Digital wallet transactions can be cheaper for businesses compared to traditional payment methods. For example, digital wallet transactions can have lower processing fees than credit card transactions.

Improved data management

Digital wallets can provide businesses with valuable data on customer transactions and preferences, which can be used to improve marketing and sales strategies.

Expansion opportunities

Digital wallets can also be used to expand your business into other markets. For instance, if you offer a digital wallet service, you can use it to accept payments in different currencies, allowing you to reach a wider audience.

Overall, digital wallets offer a range of benefits for businesses. By adopting digital wallet payments, businesses can enhance the customer experience, increase sales, and reduce costs while improving security and data management.

Check this article to explore how Bacs payments help financial companies quickly and efficiently send or receive payments.

Things before starting a digital wallet business

Starting a digital wallet business can be a lucrative venture, but it requires careful planning and preparation. When you have already done market research and clarified the target audience, their preferences, and requirements, you are ready to start with your payment solution. Here are some things to consider before launching your digital wallet business:

• Ensure regulatory compliance

Regulatory compliance is an essential aspect of any digital wallet company’s operations. First of all, digital wallet companies must comply with KYC and AML regulations to prevent money laundering and other financial crimes and verify the identity of its customers. Secondly, businesses that handle payment card data are required to comply with PCI DSS standards to protect against fraud and data breaches. Digital wallet companies also should comply with data privacy regulations, such as the EU’s General Data Protection Regulation (GDPR), to protect customer data.

Last and also important step is to comply with country-specific regulations, depending on where they operate. Regulatory compliance for the payment industry varies depending on the location of the business and the countries where it operates: 

• Digital wallet providers operating in the United States must comply with various regulations such as the Bank Secrecy Act (BSA), the USA PATRIOT Act, and the Dodd-Frank Act. 
• If your company operates in the European Union you must comply with the General Data Protection Regulation (GDPR), the Payment Services Directive 2 (PSD2), and the Anti-Money Laundering Directive (AMLD).
• Digital wallet providers must obtain a license from SAMA to operate in KSA. They must also comply with other relevant laws and regulations, such as the e-commerce law, the cybercrime law, and the personal data protection law.
• In the United Arab Emirates (UAE), regulatory compliance for digital wallets is overseen by the Central Bank of the UAE (CBUAE), which is responsible for regulating and supervising the financial sector in the country. The CBUAE has issued regulations and guidelines for digital wallets to ensure the safety and security of electronic payments and protect the rights of users.

Check this article to get more information about country-specific regulations in your region.

• Technology requirements

The technology stack for developing an ewallet depends on the specific requirements of the project, so you need to determine the right software to build and operate a digital wallet platform, according to business and users needs. Consider the following technologies to develop an electronic payment solution

Front-end Development: The front-end of the ewallet can be developed using frameworks such as React Native, Flutter, or Ionic. These frameworks allow for the development of mobile apps that can be used on iOS and Android devices.

Back-end Development: The back-end of the ewallet can be developed using server-side programming languages such as Java, Python, or Node.js. You can use a web framework such as Spring Boot, Django, or Express.js to build the back-end.

Database: You will need a database to store user data, transaction history, and other relevant information. Popular database choices for e-wallets include PostgreSQL, MySQL, or MongoDB.

APIs are also essential components of digital wallets. They help to integrate the wallet with third-party apps and services. For example, SDK.finance functionality lies in using its 400+ interactive API endpoints exposed as Open APIs (available via Swagger). They  help to facilitate integration with third party providers and services and assist in driving our customers’ products innovation.

Moreover, it is also important to consider a cloud-based infrastructure, as an ewallet requires a scalable and reliable infrastructure to handle a high volume of transactions. Cloud-based services such as Amazon Web Services (AWS), Microsoft Azure, or Google Cloud Platform (GCP) can provide the perfect solution for an ewallet.

Read this article to get more information about developing a digital wallet.

• Features implementation

The functionality of the virtual wallet depends on your business needs. You can offer the following features with the e-wallet for your customers: P2P transfers to allow users to send and receive money from others; include loyalty programs to boost users’ engagement with your brand, allowing them to earn points or rewards for every purchase they make using the digital wallet.

You can also provide account management to help users create and manage their digital wallet accounts, including adding or removing payment methods, viewing transaction history, and updating personal information. Offering budgeting tools, you allow them to track their spending, set spending limits, and receive alerts when they approach their limits. Moreover, it is possible to provide personalized offers and promotions to users based on their transaction history and preferences can help increase engagement and loyalty.

In addition, digital wallets should have strong security measures in place to protect user data and prevent fraud. This could include two-factor authentication, encryption, and fraud detection. 

Developing a digital wallet is a complex process that requires a team of experienced developers, designers, and project managers. Working with a reputable development firm can help ensure your digital wallet is developed to a high standard, meets user requirements, and provides a seamless user experience. Check this article to explore the most common e-wallet use cases.

SDK.finance digital wallet solution

SDK.finance offers a white-label digital wallet platform that allows businesses to build a digital wallet product for their customers for storing and managing their money. This e-wallet software serves as a foundation to build a standalone payment product on top or add electronic asset accounting functionality to your existing one. 

Our team uses cutting-edge tech stack to provide the latest security standards in code development. Implemented API-first architecture helps to facilitate integration with third-party providers and services and assists in driving your banking or payment product innovation. SDK.finance solution is available  on premise or via hybrid cloud deployment, which features top-notch resilience, meets the strictest regulatory requirements, and enables the usage of our platform irrespective of location.

With SDK.finance digital wallet you can offer the following functionality: multicurrency accounts, bank and bill payments, internal P2P transfers, spending visualization, and currency exchange. The e-wallet solution is designed for businesses of all sizes in the financial industry, including banks, payment processors, and fintech startups. It is a flexible and customizable system that can be tailored to meet the specific needs of each business.

Check out the demo video of the SDK.finance Platform to see how you can manage currencies and digital assets, configure exchange rates, and monitor system accounts all within one system. The SDK.finance Platform is a FinTech multitool that helps businesses of all sizes to launch their financial and payment products in record time:

Conclusion

Starting a digital wallet business can be a great way to tap into the growing digital payments market. With the right software development partner and planning, you can start making money with your digital wallet business. Make sure to do your research, choose the right platform, and invest in the necessary services to ensure your success. SDK.finance digital wallet software solution can help you to launch your payment business faster and offer a highly scalable solution for the users.