How E-Wallets Keep Your Money Safe

The use of electronic money is surging, as e-wallets are becoming a growingly popular payment option. Everyone is looking to leave the hassles of handling cash behind, so year-on-year, the number of e-wallet users swells.

People are now storing their credit card information with third-party companies, which let them make payments via their websites or mobile apps. E-wallets allow for easy in-stores and online purchases, are a favorite of those that enjoy mobile poker, and even let users send funds via peer-to-peer transactions.

Naturally, like with everything connected to money, security is of paramount importance. Thus, below we analyze how these digital wallets carry out electronic commerce while keeping you and your funds safe.

Data Encryption

Due to new technologies, exchanging information over the internet is not only super-safe, but online money transactions are more secure than any other form. E-wallet providers make heavy use of advanced cryptographic technology to enhance their wallet security. All modern financial, as well as government institutions, utilize the same protocols to cipher user data, the famous Secure Sockets Layer encryption, or SSL for short.

SSL encryption establishes a link between the client’s browser and the service’s server, and it turns data into a selection of random characters, referred to as ciphertext, which only someone with a key can read. Most companies utilize 128-bit encryption technology to secure data, but some take a step further and implement 256-bit codification. It doesn’t matter which one an e-wallet uses, as it would take centuries for the most modern computers to crack these codes using brute force attacks. It is a virtually impossible task.

Tokenization & Sandboxing

Tokenization is a relatively new thing in the digital payment sphere, and it’s similar to encryption, as it safeguards user data. When used in a card transaction, a token gets created each time a transaction occurs, and it replaces the user’s card number. It is a string of seemingly nonsensical characters that replace the user’s 16-digit card number. Once this token gets created, the actual card number is no longer in play. During the transaction, the token gets sent out, and it gets unblocked, only once it reaches the payment processor. Until it gets to this destination, it is useless to anyone else that may encounter it. Think of it as a token at a fair. If someone steals it from you, it has no value to anyone outside the borders of the fair’s setting. While, if you are using a card number, and someone discovers it, they can deplete your funds.


Tokenization swaps data for an irreversible placeholder and stores the data outside of its original environment, and encryption encodes data where it resides, with a key shared between those that are doing the encrypting and whoever needs to decrypt it in the future.

Sandboxing is also a new technique that most e-wallet apps currently employ. It isolates the payment app from all others installed on a device. By doing so, it prevents malware-infected apps from interacting with the wallet one and gaining access to sensitive information. The e-wallet only has permission to communicate with resources and tools within its sandbox. It cannot step outside these limits.

Multi-Factor Authentication

All e-wallets allow users to set-up two or multi-factor authentication inside their account. Two-factor authentication, or commonly referred to as 2FA, adds another layer of security to a user’s account, besides a username and a password. The most common forms of authentication include hardware tokens, soft tokens (time-based one-time passwords), biometrics, and SMS.

Each one has positive and negatives. While hardware tokens are likely the most secure form of authentication, they are also expensive and not very user-friendly. Soft tokens or authenticator apps are far more secure than SMS authentication, but they do not comply with some electronic payment regulations. SMS is user-friendly but has had its fair share of scandals and is hackable.

Biometric authentication is a growingly popular and secure option. Though, its advanced features are only available to those who have modern smartphones.

Potential Safety Concerns

Nothing is fool-proof, and while payment providers and e-wallet app developers are doing their best to protect users, those that choose to transfer money digitally should take precautions and pull their weight.

Beware of malware. Clicking on suspicious links can lead to keyloggers on your device, which capture every stroke you make. Unwanted software may leave you vulnerable to backdoor attacks that subvert security protocols. Download only trusted and verified apps and stay clear of suspicious texts and emails. Also, avoid public Wi-Fi when conducting financial transactions, as hackers may be able to intercept the connection between your device and the public Wi-Fi router. Always set up some authentication on your devices, or lock them with a password, so that you can feel secure in case you lose them.