Is The Convenience of eWallets Worth The Cost?

eWallets

Money is changing at a rapid pace. A worldwide cash-free society is not far away and as such, online services and apps are popping up at every available opportunity. eWallets are fast becoming one of the most popular methods of making payments online (and in some cases, in store).

eWallets are digital platforms on which you can store money to make eCommerce transactions. They make online payments faster and easier. You may also feel safer as they relieve you of the need to give your credit card details to retailers who you don’t necessarily trust.

But the convenience of eWallets comes at a cost. It seems that the better the experience, the more costly the service.

I’ve provided an overview of the most popular eWallets, including how easy they are to use and what they will cost you.

The most popular eWallets

By far, the names that everyone will recognise are PayPal and Skrill.

PayPal: Since it’s been around for a while (17 years), PayPal has built up a huge following. The usage stats speak for themselves. As of October 2016:

  • there are 192 million active PayPal accounts
  • over 15 million merchants use PayPal
  • 9 billion payments were processed in 2015

Skrill: Created 15 years ago as Moneybookers, Skrill hasn’t had quite the same success as PayPal. However, it still sees some sturdy usage. It is not as easy to access statistics for Skrill. As of 2011:

  • the customer base is over 25 million, which includes 120 000 merchant accounts

What makes popular eWallets easy to use?

Both PayPal and Skrill are popular eWallets due to their ease of use. The main selling points are that:

  • You can skip the process of entering credit card details every time you buy from a new merchant.
  • You don’t have to risk giving your credit card details to merchants you’re unfamiliar with.
  • You can keep money in the account to automatically be paid to services such as Netflix (PayPal) or Soundcloud (both).
  • Easily transfer money between friends.
  • Pay or get paid for services around the world.

There are also some reliable regional options in the eWallet world. Two popular examples are iDebit in Canada and iDeal in the Netherlands.

iDebit is even easier to use than PayPal and it has its strong proponents in Canada. The payment method is connected directly to any resident’s bank account. It is popular among fans of online sports betting and casinos. In fact, some of the most popular providers of gambling in Canada support iDebit deposits. Another main area it is used for is for bitcoin buying. The main benefit is anonymity together a preferable user experience, which is quite similar to simple credit card payments.

iDeal is similarly easy to use for those living in the Netherlands, as it can connect directly to your bank account. It is mainly used for the same purposes.

What are the costs?

PayPal’s fee structure works as follows:

  • payments to merchants are completely free
  • sending money to friends and family is free within the U.S. when paying from your PayPal balance or bank account
  • payments from debit or credit cards through PayPal to friends or family costs 2.9% plus $0.30

Skrill’s fee structure works as follows:

  • payments to merchants are completely free
  • receiving money into your account is free
  • sending money to another account costs 1.9%, capped at €20

iDebit’s fee structure works as follows:

  • making a payment from your iDebit balance is completely free
  • making a payment from online banking costs CA$1.50
  • transferring money back into your bank account cost CA$2

When should you use an eWallet?

There are clear advantages to using an eWallet. This is especially true when paying a merchant straight from funds already in the account. Payments are free, and the convenience is definitely worth it. Another advantage with some of the local eWallets is the fact it is connected directly to your bank account.

The downside is obviously the costs. If you are moving substantial sums, the convenience will become much less significant than the fees, and then you should consider direct bank transfers or other alternatives.

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Alex founded SmartMoneySmartLiving.com in 2015 to empower millennials to take control of their financial future and guide them along their journey towards financial freedom.