Thanks to consumer demand for safety and convenience, as well as accelerated digital transformation among businesses, digital wallets have emerged as the new standard for financial transactions. Enhanced security features and the ability to track spending add further to their attraction.
The cloud is a major enabler of digital wallets as it has inbuilt data security, can provide on-demand scalability and is capable of quickly performing intensive computing processes. These advantages can significantly enhance the existing features of digital wallets and even lead to new innovations in the future as they become mainstream.
Improved data security
Data privacy is a key issue for digital wallets as they contain sensitive personal and financial information from their users. While that information is already encrypted within the application, digital wallets that are hosted on the cloud benefit from further protection due to the cloud’s inbuilt features.
Remote virtual storage eliminates the need for physical servers, which reduces vulnerability to disruption and disaster. Clouds also tend to have more robust cybersecurity measures and can achieve compliance with important regulatory standards such as the Payment Card Industry Data Security Standard (PCI DSS), which is especially important for financial services.
Faster processing speed
Transaction speed is an important differentiator for payment solutions as it directly affects consumer convenience. Credit cards became popular because swiping to pay was quicker than counting out bills, but they still take time to authenticate and verify on payment devices.
Now, digital wallets can take that a step further by harnessing the raw computing power of the cloud. The cloud’s processing speeds and ability to handle digital workloads far outstrips that of traditional physical servers, enabling transactions made through a digital wallet to complete much faster on a large scale – particularly pertinent in this era of e-commerce and split-second deals.
Reliable backup and flexibility
The advantage of a cloud-based digital wallet is that it is no longer tied to any one device. With payment information securely stored in a central virtual repository, any device can become a medium for the digital wallet as long as it can operate an app – including smartwatches, smartphones and tablets.
The flexibility offered by the cloud also makes digital wallets an important contributor to the rise of the contactless payment movement. Since they facilitate payments via everyday devices, people do not have to carry additional cash or cards, which is both safer and more convenient. Added security measures such as biometric authentication can prevent misuse even in the event of loss or theft.
Supporting blockchain-based digital wallets
The cloud can provide an ideal environment for the integration of new technologies into digital wallets, such as blockchain. A leading Singapore airline with a successful frequent flyer program intended to develop a digital wallet application for customers to convert airline miles to digital currency. However, it needed a secure, scalable solution to address the trust and security issues it was having in its existing setup with transactions between multiple partners.
It was decided that the digital wallet should be developed on blockchain to safely store sensitive customer information and details via decentralisation. As a certified cloud partner of Microsoft Azure, we were able to propose an Azure-based infrastructure for both the application and the blockchain layer of the digital wallet. The cloud’s elastic storage and high-performing data engine could provide enhanced scalability, reliability, security and support.
As a result, the world’s first blockchain-based airline loyalty digital wallet application on Azure was created, earning the airline global acclaim and a steady, significant increase in adoption rates among merchants and customers alike.
Building the future of payments
Despite being relatively new to the payment scene, digital wallets are already set to overtake credit cards as the preferred payment option in countries like Singapore as early as 2024. There remains huge potential for growth, especially when paired with the considerable benefits of cloud computing, and we look forward to supporting the next standard of the payment industry.
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