The Differences between E-wallet and Payment Gateway - Let’s Sort Them Out!

Discover the differences between e-wallet and payment gateway with PayCEC as your guide.

Businesses today are spoilt for choice when it comes to payment methods. E-wallets and payment gateways have become great tools for optimizing business financial operations.

But what sets them apart, and how do they influence the payment process? To answer it, PayCEC uncovers the differences between wallet and payment gateway, helping you decide which suits your business best.

What Is an E-wallet?

Imagine having your entire wallet, filled with cash and cards, condensed into a single digital application accessible from your fingertips.

That's precisely what a digital wallet, or e-wallet, offers. It is a repository for your financial information, eliminating the need to input card details.

E-wallets offer multiple ways to make payments, catering to diverse user preferences and merchant offerings:

• Online Redirect: Users can make payments at online checkouts, where they are redirected to their e-wallet service provider to confirm the transaction securely.
• QR Codes: Payments through QR codes involve scanning the merchant's code with a device's camera or generating a QR code on the user's device for the merchant to scan, initiating the payment process swiftly.
• Near-Field Communication (NFC): Users can make contactless payments by bringing their device within close proximity (4cm) to the merchant's device, facilitating quick and hassle-free transactions.
• Magnetic Secure Transaction (MST): Similar to magnetic card readers, MST enables users to initiate payments by generating an encrypted field on their device, which the point-of-sale (POS) system can read, ensuring secure transactions without physical cards.

What makes e-wallets so popular, especially in markets like Southeast Asia?

• Convenience: E-wallets eliminate the need for users to navigate cumbersome login procedures or carry physical cards.

With funds and cards stored securely in their digital wallets, users can make payments instantly, saving valuable time and streamlining the checkout process.

They help to shorten the payment process using QR codes, NFC, or MST, as well as remember transaction information and payment addresses, reducing lost sales.

• Security: Two-factor authentication and biometric verification ensure that each transaction is authorized through unique passcodes, facial recognition, or fingerprint scanning.

Additionally, unique one-time codes for every transaction further reduce the risk of fraud or unauthentic access.

• Speed: Whether through an online redirect, QR code, NFC, or MST payments, e-wallet checkouts are swift and contactless. Users can complete transactions with just a few taps or scans, enhancing the shopping experience and reducing waiting times.

• Rewards: Many e-wallets offer personalized reward systems, incentivizing users with rewards for every purchase milestone they achieve.

From cashback offers to discounts and loyalty points, these rewards add value to each transaction, encouraging continued usage and engagement.

E-wallets have been proven to reduce cart abandonment and boost conversions for online merchants. Integrating with popular digital wallets boosts the credibility and popularity of e-commerce platforms, fostering positive perceptions of the brand.

What is a Payment Gateway?

Unlike e-wallets, payment gateways are integral players in the payment process.

Now, let's shift our focus to payment gateways, the digital cashiers of the virtual world. These facilitators authorize credit and debit card payments, functioning as the crucial link between a payment portal and the Front End Processor or acquiring bank.

Unlike e-wallets, payment gateways are not standalone entities but indispensable components in the overall payment process.

They ensure that your business receives and processes payments efficiently, providing a reliable bridge between your online platform and financial institutions. Here's a glimpse into their operational mechanisms:

1. Secure Information Transfer: Payment gateways facilitate the transfer of financial information between a business's website or application and the relevant financial institution.
2. Real-time Authorization: Upon receiving payment information from the user, the payment gateway swiftly verifies the transaction with the issuing bank or credit card company in real-time.
3. Encryption and Data Protection: By encrypting payment details and personal information, payment gateways minimize the risk of data breaches or identity theft, instilling confidence in businesses and consumers.

Difference between Wallet and Payment Gateway, Technology-wise

Telling the difference between payment gateways and wallets requires a closer look at their technology.

E-wallets have three main parts: the electronic backbone, the user-friendly interface, and the wallet applications integrated into the device you use. These work together to keep payment details safe while making transactions smooth.

When customers want to pay, e-wallets create a secure token that travels to the recipient, like a sealed envelope.

Payment gateways, on the other hand, quietly facilitate transactions between your website and banks. They focus on efficient processing without storing user data.

Payment gateways act as temporary conduits for financial information. They ensure transactions happen smoothly and securely, keeping customer information safe from prying eyes.

A Breakdown of the Differences between Payment Gateway and Wallet

Feature	Payment Gateway	E-wallet
Functionality	Acts as a mediator between merchant and financial institutions for processing transactions	Allows users to store, manage, and transact money electronically.
Purpose	Transmits payment information and authorizes transactions.	Stores payment information and conducts transactions.
Transaction Processing	Enables merchants to accept payments from customers using various payment methods.	Allows users to make payments directly from their digital wallets.

Payment gateway or E-wallet? Choosing Your Right Partner

Analyzing the merits of each option offers a shortcut to finding your financial fit.

Now that we have explored the distinct features of e-wallets and payment gateways, the question arises: which aligns with your business objectives and customer preferences?

The answer lies in understanding your unique requirements and evaluating the merits of each solution.

If your priority is enhancing user experience, reducing cart abandonment, and fostering brand trust, integrating popular digital wallets into your payment ecosystem could be the way forward. Several solutions are available to suit the specific needs of different smartphone users. Below are two notable examples that exemplify the convenience these innovations offer.

Apple Pay

As the name suggests, Apple Pay caters exclusively to users of Apple devices, providing contactless payment experience across iOS, iPadOS, and watchOS platforms. Users can securely make payments within apps and websites using Safari browser integration.

The verification process involves a passcode set on the device and optional touch or Face ID authentication, ensuring quick and worry-free payments.

Google Wallet

While Google Wallet and Google Pay are often intertwined, Google Wallet remains a distinctive solution enabling users to make payments using a fingerprint or password authentication.

By harnessing NFC capabilities alongside cloud technology, customers can enjoy the convenience of secure and rapid digital payments by simply tapping their phone on any NFC-enabled point-of-sale (POS) terminal during checkout.

Payment Gateway Top Picks

Conversely, if you seek decent transaction processing capabilities, compatibility with your existing systems, and extensive security features, go for a reliable payment gateway. Here are some recommendations:

Stripe

Positioned as the financial backbone of the Internet, Stripe captures the hearts of developers and non-technical users.

While the depth of options may initially seem daunting, Stripe provides intuitive implementation tools, including an implementation wizard that guides users through the setup process.

Stripe empowers users to gain valuable insights into their payment operations, from monitoring sales volume and fraud reports to exploring detailed billing analytics.

Trust its customizable buy buttons and integration with online stores for faster sales and enhanced checkout experience.

Square

Square stands out for its versatility, supporting physical card reader machines and online payment processing. With a sleek and user-friendly interface, Square provides a comprehensive platform to manage transactions effortlessly.

The main dashboard offers a snapshot of business performance, allowing users to track sales and access a wide range of features through an intuitive menu.

PayCEC

Integration with the PayCEC payment gateway allows merchants to broaden their payment options, providing a versatile checkout experience for their customers.

With just a few taps or scans, customers can complete transactions swiftly and securely, reducing friction in the payment process and minimizing cart abandonment rates.

Whether through API integration or third-party platform compatibility, PayCEC simplifies the integration process.

With fee-free setup and 24-hour-fast integration, PayCEC empowers merchants to embrace digital payments and stay ahead of the curve in an increasingly cashless society.

Can’t Decide What’s Better? Go Both Ways!

Double the convenience, double the security: Integrating e-wallets with payment gateways.

Understanding the difference between wallets and payment gateways doesn't limit you to choosing just one.

The truth is integrating an e-wallet into your payment gateway provides customers with doubled convenience and security.

Another great thing about doing this is it requires a few simple steps to complete, which you can see through the example below:

1. Register with the PayCEC Payment Gateway: Kick off the process by registering for an account with PayCEC. Head to the website and navigate the signup procedure to establish your merchant account.
2. Access Your Payment Gateway Dashboard: After registration, visit the PayCEC dashboard. Here, you will find settings like integrating e-wallets.

3. Initiate E-Wallet Integration: Browse the payment options segment and locate the e-wallet integration tab.

   PayCEC boasts compatibility with numerous popular e-wallet services such as GooglePay and ApplePay.

4. Enable Your Preferred E-Wallets: Handpick the e-wallets you wish to integrate into your payment gateway and activate them as viable payment alternatives for your clientele.

   Customization tools provided by PayCEC make configuring and fine-tuning your payment settings a breeze.

5. Conduct Trial Transactions: Before making e-wallet payments accessible to your customer base, conduct trial transactions to validate the integration's functionality.

   Utilize PayCEC's testing environments and sandbox features to simulate transactions without risk.

6. Launch Your E-Wallet Integration: Once satisfied with the integration and testing phases, it's time to go live and commence accepting e-wallet payments from your patrons.

Rest assured, PayCEC offers support and guidance throughout the setup process to ensure a seamless transition.

Key Takeaways

By offering the convenience and security of digital wallets, businesses can significantly boost conversions, as buyers are more likely to complete transactions when these payment options are available.

Therefore, adding e-wallets into your payment gateway helps optimize your payment systems to fit the changing minds of customers, eventually driving success in the digital marketplace.

About PayCEC

PayCEC was established in response to the growing need of businesses to accept online payments more quickly and easily. In the new media era, our payment flow has evolved to work seamlessly and effectively across all platforms and devices. We pride ourselves on combining superior technology with first-class customer service.

PayCEC is a truly global payments platform that not only allows customers to get paid but also withdraws funds to their business accounts in various currencies.

We have created an open and secure payments ecosystem that people and businesses choose to securely transact with each other online and on mobile devices.

PayCEC Team

• [email protected]
• +65 6631 8332
• www.paycec.com