BATANGAS COLLEGE OF

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College Department

FINANCE IN INFORMATION TECHNOLOGY:

AN INTRODUCTION TO

DIGITAL WALLETS

A CASE STUDY

Presented to

Ms. Leah B. Lina

In Partial Fulfilment of the Subject Requirement in

Science, Technology and Society

Bautista, Dominic Charles R.

Marcelino, Jhon Carlo A.

Marcelino, Marc Kevin G.

Rocafort, Russel Vincent V.

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I. Introduction

A digital wallet, often known as an 'E-wallet,' is an online electronic service that allows

consumers to conduct electronic transactions using their computers or smartphones. Digital

wallets are widely used for online purchases, and they are a convenient method of doing so.

Digital wallets are simple to operate; no more entering your credit card information every time

you check out, or fumbling for your wallet at the store. Your payment information is kept in a

secure, central location. The card number is never saved in the app, but instead is allocated a

unique virtual number. This safeguards your funds even if your smartphone is misplaced or

stolen. Still, always do your homework on the digital wallet issuer before using it, just to be

sure it's authentic. Digital wallets enable customers to pay for goods with their cellphones and

can be used in conjunction with digital wallets. A digital wallet can also be used to save data

from loyalty cards and digital coupons. Digital wallets minimize the need to carry a traditional

wallet by securely and compactly storing all of a consumer's payment information.

Finance, on the other hand, is a wide phrase that refers to the study and administration

of money, investments, and other financial instruments. Finance is typically classified into three

categories: governmental finance, corporate finance, and personal finance. Social finance and

behavioral finance are more recent subcategories of finance. Finance and financial activity have

existed since the birth of humanity. Banks and interest-bearing loans have been around since

3000 BC. Finance is a system that involves the exchange of funds between borrowers, lenders,

and investors. It operates at a variety of levels, ranging from individual enterprises to global

and national organizations. As a result, there are several difficulties associated with it, including

those relating to markets, institutions, and so forth. Online banking and transactions, as well as

mobile payments, are extremely common in today's culture. Because financial transactions are
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so widely utilized, there are several weaknesses; many financial organizations must adapt to the

most recent security and technology in order to remain competitive. Even though there are

several hazards involved with the usage of information technology, there are numerous benefits

to using advanced technology. Every day, billions of financial transactions take place, which is

why information technology is ideal for the way financial institutions are set up. The software

tools and computer systems in place for automation provide a significant value to the use of

information technology in banking.

When considering information technology, one must consider the overall global financial

structures in place that allow this sort of technology to exist and work on a global scale. The

role of information technology in finance enables financial firms to acquire fresh information at

the same rate as their competitors. The influence of information technology on financial

services also helps clients to quickly make online transactions, creating a better confidence in

finance, enabling for the growth of information technology and originally creating a more

speedy and efficient service. Financial reporting is another area of information technology that

has had a significant influence on the financial services sector. The increasing modernizations

centered on information technology have substantially improved the way we use financial

reporting.

Because of advancements in information technology, finance can now work on a global

scale. "Financial markets may be regarded as the first organised, global information

marketplaces that functioned through networked computers." Financial markets would be

unable to adapt to global trends without information technology, and finance businesses would

be unable to acquire knowledge at the same rate as their rivals. For example, the Internet
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provides continuous access to credit scores and credit ratings to all lenders, insurance

companies, and enterprises that demand financially responsible clients.

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II. Challenge

Consumers and merchants are affected by digital wallets in very different ways. As

we've seen, different digital wallets have a variety of form factors, technology, and business

models to choose from and implement. Through various "pipelines," different digital wallets

acquire and send data that is distinct from one another. As a result, there are a variety of

hazards associated with various digital wallets.

VULNERABILITIES IN SECURITY

Digital wallets differ in back-end construction of encryption and level of security. There

are several differences between digital wallets in terms of security measures namely, the

amount of user interaction required to authorize a transaction, the type of data stored, the type

of encryption for a token used, the applications that can access the consumer's data, and the

ability to remotely disable or "wipe" the device with a distant, unique or foreign external code

(Levitin, 2018).

It is possible to have different levels of security depending on the type of payment

made, even within the same digital wallet: for example, a credit card or signature-debit card

against a PIN-debit card Debit cards must be able to "multihome," which means that they must

be capable of processing transactions on more than one unaffiliated network, in order to be

legal. The use of a particular network (and, consequently, a particular authorization technology)

by the consumer is dictated by the Application Identifier (AID), software installed on the

merchant's point-of-sale terminal. Whether or not the consumer understands the choice

involved has implications for the fraud risk, because there is a significantly greater fraud risk for
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single-factor, authenticated signature-debit payments than for two-factor, authenticated PIN-

debit payments. In comparison to, say, copying a PIN and the one-time data from a chip, it is

far easier for fraudsters to copy the magnetic strip of a card, for example.

HACKS, FRAUDS, AND LEAKS

In relation to security measures, hacks, frauds and leaks come to a result of low-level

security of most digital wallets. Instances of code hacks, encryption tampering, stealing of

assets, phishing scams, and identity leaks, all lie under the challenges of digital wallets and

their implementation.

Consumers’ direct monetary exposure to fraud risk is limited, however, for traditional

plastic credit and debit cards, and as noted in the previous subsection, those same legal

regimes would seemingly apply to credit and debit payments via digital wallet. Just like hackers

and frauds, the digital wallet itself is prone to hijacking, corruption of credits, interfere with

PINs, make purchases, obtain cash advances, abuse the wallet itself, sell information, and leak

it out to the public; thus, remaining a challenge for digital wallet users up to this day.

CONSUMER SATISFACTION, FEEDBACK AND TRUST

A research conducted in the Swinburne University of Technology in Melbourne, Australia

piloted a survey regarding consistencies in customer satisfaction, feedback and trust regarding

the services offered by digital wallets.

All participants spoke of the importance of protecting their personal data, location,

family, friends, and personal resources, but the amount of concern about what should be

protected and why differed from one participant to the next, according to the survey. High-risk

data, according to some participants, includes key identifying information that is difficult to
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replace and that, if leaked, would likely result in identity fraud and significant disruption to

personal life, such as passport, driving license, and health card information, among other

things.

At the other end of the scale were individuals who, although aware of data theft and

identity fraud, stated they were not overly concerned. This group ranged from those ready to

move all their physical cards online for greater convenience to only those who would put some

cards online.
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III. Solutions

Since digital wallets are slowly becoming a trend nowadays, especially in these times of
crisis of the pandemic, the researchers were to propose possible solutions for the problems
stated above contrary to the challenges led upon by digital wallets. Listed below are some:

1. Two-factor authentication for digital wallet operators

2. Fortification of encryption for moderators and developers of digital wallet apps and
carriers

3. Identity verification for account strength issue

4. Password preference, must have an uppercase, lowercase, numbers and at least one
special character for higher security

5. Be vigilant for phishing opportunities and scams scattered upon the web

6. For web browser users, always be wary of the websites you visit; make sure it is
secured

7. Limit cookies usage and clear cache as often as you can

8. For app developers, it is a must to provide open and accessible customer service
features for the apps

DIGITAL WALLET PROS:

1. With 2FA settled, security is ensured and safety is always a priority

2. Less hassle for transactions, convenient and smart use of technology

3. Expenses are always tracked on record you can always check every time

DIGITAL WALLET CONS:

1. Tax implementation on purchases still applies

2. Limited retailers like local merchants still doesn’t support payment via digital
wallet

3. User-dependency and awareness on security measures upheld by digital wallet

developers
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IV. Benefits

Students

Students will benefit from this research since they will be more aware of the pros and

cons of digital wallets. In addition, the students will have the ability to keep track of their

financial activity.

Community

The community will gain knowledge from the study since it will reveal that digital wallets

allow consumers to send monies to friends and family members who live in distant countries. A

digital wallet, on the other hand, securely saves and organizes all of the payment information of

its users in a compact manner. Because of this, there is a significant reduction in the

requirement to carry physical wallets, as well as the necessity for physical banks and

organizations in order to create and maintain a bank account. So they also provide a means of

connecting persons and companies in rural areas.

Professionals

Professionals will benefit from the study of digital wallets because they will be more

aware of the ease of having a digital wallet because they manage a large amount of work and

do not have the time to visit the bank.

Researchers

Researchers are given access to the contents of this case study for modification, reference, and

source of reliable information for their studies in the future. May this paper contribute to the

general welfare of the academe and the future of finance and information technology.
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V. Results

Digital wallets enable customers to pay for goods with their cellphones. A digital wallet

can also be used to save data from loyalty cards and digital coupons. Information technology is

ideal for the way financial institutions are set up. Because financial transactions are so widely

utilized, there are several weaknesses. Many financial organizations must adapt to the most

recent security and technology in order to remain competitive.

The role of information technology in finance enables financial firms to acquire fresh

information at the same rate as their competitors. Information technology also helps clients to

quickly make online transactions, creating a better confidence in finance. The Internet provides

continuous access to credit scores and credit ratings to all lenders, insurance companies and

enterprises that demand financially responsible clients. Financial markets would be unable to

adapt to global trends without information technology.

With the suggested solutions at hand, it is a certainty that we can maximize the

potentials and offers that digital wallets impose to humans. Our security is heightened and our

identities will not be put to the risks. We also maximize our status and awareness online as

users of the worldwide web, we remain responsible consumers, and we protect our assets just

like banks do. Overall, we all just want digital wallets to function like normal wallets do, it’s just

a newer and more technological innovation that is offered and invented for the future of

finance.

In our digitally-emerging world, technology continues to attempt to make human lives

easier with its inventions and additions to the whole body of knowledge. In every aspect of life,

including finance and how people handle payments, technology still tries to cover up

convenience and an easier way of living. Since we are slowly approaching the future where
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everything happens within invisible connections that fiber optics and radio waves offer to

humans, we can never deny that technology is an inevitable thing, that even physical wallets

can be replaced by mobile phones we use today. But, one thing is for sure, the innovation of

digital wallets remains a constant thing and more contributions like these will arise years from

now.
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REFERENCES:

Bamforth, J. (2019–2020). Digital wallets: Impacts, implications and issues. 460 Degrees. Published.
https://apo.org.au/sites/default/files/resource-files/2020-07/apo-nid309504.pdf

Soegoto, E. S., & Sumantri, M. B. R. (2020). The influence of digital wallet. Published.
https://www.deepdyve.com/lp/iop-publishing/the-influence-of-digital-wallet-n0Dtiru6ih?articleList=
%2Fsearch%3Fquery%3Ddigital%2Bwallet

Levitin, A. (2018). PANDORA’s DIGITAL BOX: THE PROMISE AND PERILS OF DIGITAL WALLETS.
UNIVERSITY of PENNSYLVANIA LAW REVIEW. Published.

Krebs, B. (2014). Spam Nation. Sourcebooks, Inc. https://www.sourcebooks.com

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