People looove their mobile wallets. They fit in a smartphone (no need to carry those bulky physical wallets), provide more robust security (compared to flashing a credit card in public), and allow us to pay virtually for anything (and do so much more) from the comfort of our homes.
If you’ve identified a unique opportunity and want to create a digital wallet, you’re in the right place. In this blog, you’ll learn how to create a wallet app, some of the best practices, and what you need to win in this highly competitive niche.
- Digital wallets will rule e-commerce payments in the near future (40% by 2024).
- To develop a mobile wallet with a sticky user experience, you must carefully consider the type of solution you want to build. The main types of e-wallets include open, closed, crypto, and mobile banking extensions.
- Mobile wallet development involves a lot of legal formalities and implies following strict security regulations, including Payment Card Industry Data Security Standard (PCI DSS).
Table of Contents
- E-Wallet Market Overview
- Examples of the Successful Mobile Wallets
- Types of the Mobile Wallet Apps
- Must-have Features of an E-Wallet
- Technologies Used When Building a Digital Wallet
- 5 Steps to Create a Wallet App
- How Much Does It Cost to Build Your Own E-Wallet App?
1. E-Wallet Market Overview
The COVID-19 pandemic made a huge impact on the mass adoption of digital wallets as with every other aspect of fintech app development. According to Finaria, the industry will grow to $2.4 trillion in 2021 (a 24% increase from 2020) and may reach $3.5 trillion by 2023.
Here are a few noteworthy facts speaking of the rapid growth of the e-wallet market:
- 32% of mobile wallet users rely on three or more digital wallets
- 40% of all US e-commerce payments will be handled via digital wallets by 2024
- 67% of retailers accept contactless payments at PoS terminals
- more than four out of 10 US smartphone users used a contactless payment system at least once in 2021
- the average annual spend per mobile wallet user is expected to grow to $2,439.68 in 2021
It also seems that the mobile wallets from tech giants like Apple, Google, and Samsung outperform all other competitors in the space. Compare these graphics to see what Apple Pay, Google Pay, and Samsung Pay have been able to achieve in five years:
That said, many other digital wallets are competing for consumers’ attention in the US, including Venmo, PayPal, Cash App, Walmart Pay, Facebook Pay. We’ll discuss different types of e-wallets and check out the most successful ones in the following sections. For now, let’s focus on a couple of trends I’m noticing with these solutions.
Being a virtual representation of our physical wallets, digital wallets have fewer restrictions in terms of what they can hold. For example, most mobile wallets allow us to add gift cards, passcards, rewards, coupons, and other cards with monetary value, besides the ubiquitous debit and credit cards.
Now, it looks like e-wallets want to go further by connecting to decentralized finance services (DeFi) and crypto. For example, Venmo allows its customers to trade the most popular cryptocurrencies, while PayPal does the same and, on top of that, supports crypto payments.
Partnerships with banks
First, mobile wallets have taken down standalone e-wallets by major banks, and now they want to step back and integrate with banking services to offer more value to their customers. For example, Google is working on a GooglePlex update to its Google Pay wallet, which will provide savings and checking accounts from leading banks.
Samsung Pay has recently partnered with SoFi, a personal finance company, to provide a seamless money management platform right inside Samsung Pay. As a result of these new partnerships, customers can order credit cards right inside a wallet app and access other financial services, such as budget management or investing.
Related: How to Make a Mobile Banking App
Identities and virtual keys storage
Apple Pay will be rolling out support for driver licenses, virtual hotel keys, and select BMW vehicles, which they ultimately envision as a feature for storing all kinds of virtual keys. We already take our phones with us everywhere we go. So why not carry less stuff, right?
I think it’s safe to say that e-wallets are gradually turning into sort of financial hubs for their owners because it’s very convenient to manage all your finances in one place. I literally envision how mobile wallets clash with mobile banking apps, and we see more exciting mergers and acquisitions.
2. Examples of the Successful Mobile Wallets
Before you build a wallet app, it makes sense to look at what the industry leaders are doing.
Apple Wallet is a nifty little app behind Apple Pay, which is the #1 mobile payment option in the US at the moment.
Users can add their credit and debit cards, gym passes, loyalty cards, tickets, virtual keys, and soon IDs in the app.
Apple Wallet is also the place to set up Apple Cash — an easy way to send and receive money while messaging.
Walmart is an iconic example of a closed wallet that serves more as a virtual storefront than a wallet. Customers can only use the app to buy stuff at Walmart and fuel at select gas stations. The app uses QR codes and NFC to accept payments at self-checkouts.
Cash App positions itself as an e-wallet/banking app. Still, since it’s not tied to any specific bank, the app offers its customers a wide range of options. Not only can they make online payments, send and receive money, but there are also such features as investing, buying crypto, and instant discounts.
3. Types of the Mobile Wallet Apps
Not all e-wallets are created equal. If we look closely at all the apps available, we’ll soon discover that their functionality and area of application differ quite a bit. So without further ado, let’s review the most popular types of mobile wallets.
Open-loop / closed-loop mobile wallets
Also called open and closed for simplicity, these wallets differ by where you can use them. If you can pay only at certain places, the wallet is closed. Walmart, Starbucks, and 7-Eleven are perfect examples of such solutions. We can’t pay rent or Amazon Prime membership using these apps.
That’s because their purpose is to offer their customers more flexibility and perks while buying products from particular companies. A mobile wallet, in this case, serves as a virtual storefront and strengthens relationships between customers and a business.
Related: How to Build a Neobank App
As for open digital wallets, these allow you to add all sorts of cards and tie in different bank accounts, but most importantly — you get to pay for anything you want. For example, in Google Pay or Venmo, we can add any number of credit/debit cards, gift cards, etc., and use the wallet to pay for Uber rides, utility bills — well, virtually for anything.
Mobile bank extensions
Today, it’s hard to imagine a mobile banking app without wallet functionality: we can fund our cards, make payments, and send money transfers using these apps. These wallets are often very robust when it comes to features, but at the same time, users can only deal with financial services offered by a particular bank.
Crypto wallets are where we can buy, hold, and transfer cryptocurrencies. That’s the first thing anyone needs to invest in (stake) or trade crypto. Most crypto wallets used to start on the web (because that’s where blockchain technologies emerged), but more and more of them are migrating to mobile — because that’s where their users spend the most time.
As I’ve already mentioned, more widespread open wallets (like Venmo or Cash App) tend to integrate at least some sort of crypto interactivity to engage more users.
4. Must-have Features of an E-Wallet
To compete in the e-wallet space, your app will need some standout options. But what are the top features customers appreciate in digital wallets? Let’s review them one by one.
Registration, sign-in, and onboarding
Like any other mobile app, your wallet first needs to seamlessly onboard new users and introduce them to its functionality in a friendly manner.
The obvious way to register a new user is via a phone number, which can also help with two-factor authentication later on as they continue using the app. However, you may also consider social authentication options like Facebook and ask for a phone number later.
Think of an easy way for users to add their card information and other details.
Wallets store our money so we can pay for stuff. Therefore, any mobile wallet needs to provide simple ways for paying for goods and services. Besides that, you’ll need a way for users to send and receive money from each other.
All payments should go into an easily accessible and intuitive history of transactions. Adding search, filtering, and sorting options to this section seems like a good idea.
Budgeting may sound like it’s calling for a standalone app. At the same time, a mobile wallet could bring more value to customers by showing how they spend their money across various categories and even provide advice on optimizing their spendings.
Displaying products up for sale right inside a wallet app is typical of closed wallets that serve specific brands, such as 7-Eleven or Starbucks. However, you might have affiliate partnerships with multiple companies to sell products or services that your target audience loves.
Suppose the customer can order a cashback card from inside your wallet or generate bonuses by making payments. In that case, these bonuses (or cashback) might need a dedicated screen with the balance overview, etc.
Money is a social tool. That’s why some e-wallets, e.g., Google Pay, design their wallet user experiences around the user’s relationships with people and businesses. Being able to chat and send money in one place is convenient.
Crypto, investing, and other advanced features
Finally, leave some room in the app for unique functionality. Some of these features I’ve noticed with other digital wallets include loans, bill splitting, crypto trading, and investing.
5. Technologies Used When Building a Digital Wallet
Mobile wallet development requires both front-end and back-end technologies. The server side (aka back end) is often built with programming languages like Java, Closure, or Golang and high-throughput databases like DynamoDB, Couchbase, or Oracle.
To create a digital wallet for mobile, I’d recommend sticking with native development tools:
- Swift for iOS
- Kotlin for Android
That way, you not only ensure your mobile wallet flexibility, but you can also count on supporting new features from iOS and Android updates.
Customers seem to favor NFC and QR code payments if you are looking for advice on what technologies to use for mobile payments.
- NFC is used for tap-and-pay features
- QR codes are used for instant payments too, but also as a means to transfer crypto to the correct address
You can also use Bluetooth for that, which would inevitably mean a lot of hustle for end users.
I’m not recommending any payment SDKs in this blog because it’s not really your choice. When integrating a payment gateway, you will have to use whatever SDK or technology your financial partner is using. That means that if a bank you’re partnering with uses an SDK by MasterCard or Razor, or NMI, etc. — you’ll have to stick with it. Or else work on custom integration using your partner’s APIs.
6. 5 Steps to Create a Wallet App
What are the main steps you need to take to build a mobile wallet app?
Step 1: Design and prototype
The first step is to find out how your target audience manages money and where they have problems. You then design the screens of your wallet based on these findings and put them together into an interactive prototype.
The sole purpose of the prototype, which is a clickable version of your app implemented purely in designs, is to verify your assumptions with real users. Based on the feedback, you can update the prototype by adjusting the app screens, adding or removing specific features.
Step 2: Develop a mobile wallet
Once the prototyping is over and you have a virtual version of the wallet that customers will likely appreciate, it’s time to start building a digital wallet, i.e., putting lines of code in order.
There are quite a few things you need to consider while creating a digital wallet.
Of course, security comes first. Modern smartphones and wearable devices already have pretty strong security built-in. You can extend that into your app by applying bio authentication like TouchID or FaceID on the iPhone.
Besides that, there are other best practices to protect your digital wallet:
- tokenization (using randomized tokens instead of actual credit card numbers when exchanging transactional data)
- two-factor authentication (consider integration with Twilio or similar services)
- strong data encryption (both in transit and at rest)
- PCI compliance (consider VGS Mobile SDK, PaySafe, or similar tools)
From the UI/UX perspective, you should avoid displaying sensitive card details in the app in full and offer an option to hide balances and other data that customers may be checking in crowded places. Strong passwords and SSL for transferring data are also required.
Another critical aspect to keep in mind when you build your own e-wallet is an open architecture, meaning the app should be able to connect with external services and ideally provide the ground-level architecture for other developers to build on. For developers, that means creating a lot of APIs.
This approach ensures a vibrant ecosystem around your digital wallet as it matures, and more businesses want to connect with it and use its features.
As a start, you will probably need to work with services like Plaid to connect the wallet to users’ bank accounts. You will also need to integrate with a payment gateway to process transactions. Fortunately, that’s not something you need to build from scratch, as there are plenty of payment service providers available with pluggable SDKs.
Use of third-party components
As with any other mobile app development project, you can find many plug-and-play SDKs to speed up delivery. However, due to security issues, it’s recommended that you choose such SDKs only for peripheral features, like chatting or image/QR code recognition.
The core functionality must be programmed manually to exclude even the slightest chance of having a backdoor.
You will also need a back-office app to manage users and their interactions with the mobile wallet. Consider using a template that supports customization to blaze through this mini step as you make an e-wallet app.
Step 3: Test
Testing begins during development when coders implement unit tests in code to see if various features are working as expected. During the formal testing phase, though, we need to run the whole app through functional and UX testing.
Needless to say, testing an e-wallet takes a lot of skill and expertise in mobile wallet application development, and I suggest you rely on a qualified development partner to go through this step. In addition, you can hire a cybersecurity agency to perform a security audit of your mobile wallet.
Step 4: Release
Once you’ve completed the digital wallet app development and testing steps, you’re ready to release your e-wallet. It takes jumping through a few hoops of Google Play’s and the App Store’s guidelines before your app becomes available to the public.
Plus, the server side should be switched to a live environment and connected to the app. Hopefully, downloads will start to pile up shortly after.
Step 5: Maintain
You may feel (rightfully so) like you’re going to market with a complete solution. However, having in place tools collecting app usage metrics and allowing you to further improve your wallet based on how users interact with it will be crucial to your app’s success.
Once the app is in the mobile stores, your job will be to keep it relevant by updating to support the latest OS features, ironing out rare bugs, and streamlining the user experience.
7. How Much Does It Cost to Build Your Own E-Wallet App?
A minimum viable product (MVP) version of a mobile wallet will cost around $80,000, and a complete solution may end up costing $200,000 or more.
Remember that a huge chunk of e-wallet software development happens in the back end. That involves building APIs, a high throughput database, core logic, and many other behind-the-scenes things that a mobile wallet can’t operate without. Plus, an admin website.
Reach out to speak with our experts if you’d like to learn more about how to create a mobile wallet app.
Frequently Asked Questions
How long does it take to develop a wallet app?
Around 6-8 months, depending on how many options you envision.
What technology should we pick for implementing mobile payments: QR codes, NFC, Bluetooth, or something else?
You can’t go wrong with NFC (in terms of security and ease of use). However, we recommend having QR codes as an alternative method too.
What is a good way to secure a 12-word seed phrase used for protecting a crypto wallet?
You can send the phrase via a text message or as a pdf to the user’s email. That way, the phrase never gets shown on a screen.
Can you provide an example of the innovative use of a digital wallet?
Popwallet is a cloud platform that allows merchants and other businesses to easily create digital passes and offers stored in the Apple Wallet.
Can one create an e-wallet app using React Native or Flutter for the app to work on iOS and Android?
Yes, although we recommend using native technologies to make your solution more flexible in the long run.
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