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DIGITAL WALLETS AND E-COMMERCE PAYMENT SYSTEMS Digital Wallets and E-Commerce Payment Systems Name of the Student: Name of the University: Author’s Note: Table of Contents 1. Introduction3 1.1 Background3 1.2 Problem Statement3 2. Approach4 2.1 Research Design4 2.2 Data Collection Technique5 2.3 Organization of the Study5 3. Literature Review6 3.1 Description of Digital Wallet6 3.2 Usage of Digital Wallet6 3.3 Benefits of using Digital Wallet7 3.4 Challenges faced by mobile wallet industries8 3.5 Risk Associated with E-commerce systems8 3.6 Strategies used to reduce the risk9 4. Conclusion9 References11 1. Introduction The research proposal is based on the topic regarding digital wallets or e-commerce payment systems advancements in future and levels of electronic wallets security. The proposal is based on the different sections of the literature review that would eventually help in the advancement of the research paper. 1.1 Background With the advancement of technology, the use of digital wallets has become a new trend in the present world. The virtual e-commerce payment system has replaced the burden of carrying money or cards for many people. The digital wallet or e-commerce payment systems allow the customer to use the cash along with the loyalty points or any other combination to make payments. The digital wallet is highly attractive in nature and currently, the digital wallet is expected to explode if it can provide the kind of security that is demanded by the people. In the recent past, the concept of digital wallet and the development of a few applications for the smartphones has embraced the population around the globe. The appreciation of the digital wallet is mainly due to the effortless transactions to some merchants. However, there are a few problems related to the digital wallets or e-commerce payment systems advancements in future and levels of electronic wallets security. 1.2 Problem Statement The major problem which affects the digital wallets or e-commerce payment systems is regarding the low level of trust and security of the wallets. It is considered that the data transmission across different networks is not very secure. The transactions that are made using the digital wallet will be the cause of various types of risks. Therefore, the study is based on the risks which can reduce the level of security in the digital wallets or e-commerce payment systems. 2. Approach The current section of the study will explain the methods which can be used for the analysis of the various strategies and tools that are relevant to the topic. The research is based on the understanding of the security issues which can affect the digital wallets or e-commerce payment systems (Turban et al. 2018). Additionally, with the help of the research methodology, the research paper will gain a support by the different methods and data collection techniques. The support will be mainly regarding the design of the research paper and also the technique which is used to collect the data. Moreover, the present section will also explain the usage of different types of data collection technique and the type of research design that can help in maintaining the quality of the research. 2.1 Research Design The research design is basically the type of strategy which is chosen by the researcher as a method to link the various details and supportive points in a systematic manner as it can help in improving the quality of the research paper as well (Graylin, 2015). The research design is mainly categorized into various parts which include the descriptive, graphics and descriptive designs. For the successful completion of the research paper, the descriptive research design will be used and mainly because of the reason that it can help in explaining the main issues by keeping the originality level same. The different views and theories will be used to provide a better understanding of the topic, digital wallets or e-commerce payment systems and the levels of security. The support of the research design to the researcher would significantly help in the improvement of the in-depth knowledge of the topic. 2.2 Data Collection Technique The data collection technique is the support system for any research and the reason for its support is mainly due to its capability to maintain the collected data from various sources in a systematic manner. The collection of data from different sources allows the researcher to reach to a specific conclusion with the help of the results and findings within the study (Siegal, Rowell and Hintz, 2018). Additionally, it is also essential to understand that the data collection technique is responsible for the quality of the research. Moreover, it helps in understanding the sources from which the data is collected are divided into two main parts which include the primary data collection sources and the secondary data collection sources. The research paper will be based specifically on the secondary data collection technique and would include the studies from various literature and journals. 2.3 Organization of the Study At the initial stage, the literature will be based on the describing the topic and the problems that are related to it. The description of the digital wallet in the literature is essential as it is the base of the study and would provide the detailed understanding of the topic. Later, the discussion of the problems which can be caused by the digital wallets which will be supported by the various literature (Wankmueller, 2015). Additionally, the analysis or the literature will also include the techniques which can avoid the issues of security in digital wallets of e-commerce payment systems. The priority of the problem which is closer to the literature review will be high and it will be evaluated in-depth for a better understanding. 3. Literature Review 3.1 Description of Digital Wallet Digital wallet can be defined as a virtual wallet where individuals can make payments online through electronic devices. The process of the transaction is very simple where individuals only need to connect their bank account in case making payment via digital wallet. With the evolution of technology, digital wallets today is not only used for marking transactions but also used to authenticate the holder's credentials. Furthermore, the technology has both information and software component, where the software provides security and the encryption for an individual's personal information for the actual transaction (Kohli, 2017). There are various digital wallets present today and among them, the most famous are Paytm, Apple Pay, PayPal, Venmo, Citrus Pay, Juspay, Ezetap etc. The entire business industry is adopting this technology and the whole working procedure is getting simple through Digital Wallet both for companies and customer. This is because the money is directly transferred to the bank accounts and it reduces a lot of headaches. However, as the technology is new, there is still some organizations and individuals who hesitate and avoid using such online transaction system with the fear that their money can be lost. 3.2 Usage of Digital Wallet In a survey, it is found out that around 25 percent of online shoppers relinquish their orders because of the frustration of filling up forms. This is where; the digital wallet comes handy as it gives the online shoppers an option to transfer money directly which brings better utility and usability of these systems. The mobile wallet industry has grown rapidly not only by its value but also its volume has doubled in the last few years. The digital wallet allows users to both send and receive money to and from another user. A cashless economy is a new trend among the millennial and it is here to stay for a long time along with being the future of pay (Joyce et al. 2015). People can use a digital wallet anytime, anywhere without the headache of carrying cash or cards along with them all the time. It not only is a great payment procedure but also on the other hand, it increases and provides security of transaction as it does not transfer the card details to the websites. It allows developing counties to involve more freely in the global financial system. 3.3 Benefits of using Digital Wallet Around 2 billion people around the world use a smartphone and many of them keep their phones along with them which makes digital wallets a convenient way for payment. Near Field Communication (NFC), are the latest digital wallet apps where it allows the payment information to pass to the other phone just by holding the phone a few centimeters away (Toomer et al. 2016). There are a lot of benefits to using a digital wallet and one of the most useful is that it is fast and easy when compared to other transaction procedures. Moreover, another reason for the increase in usage of this device is that it is of lower cost for retailers. The in-stores will no longer need a cashier to collect money if the payment is being made online. It also gives organizations a competitive advantage because it redefines the customer’s experience along with providing a convenient transaction procedure. 3.4 Challenges faced by mobile wallet industries There are a number of challenges which the mobile wallet industry is facing and they need to work hard to overcome such challenges. These are mentioned below: · Inertia in adoption: Though the digital wallet has taken over the market, still there is the concern related to security, transparency, and privacy among customers. This is one of the challenges which the mobile wallet industries face currently and they need to improve their features in order to change the perspective of people. · Security related issues: The biggest challenge that stands in the way of the success of an organization dealing in this field is security related issues. Breaching of data and frauds can damage the reputation of companies in no time. · Competition from Debit and Credit cards: Cards also put up a challenge in the way for the digital wallet because debit and credit cards have been there for a long time gaining people trust over time and it will be hard to change that view so quickly (Heiskanen, 2016). · Issues with compatibility: Another challenge is that the digital wallet is not supported by every device which makes the operation difficult for people to use the system. 3.5 Risk Associated with E-commerce systems There is a lot of risks associated with E-commerce system and it is extremely essential to discuss and make people aware of the consequences which can happen while using this system. The vulnerabilities of using GSM or CDMA because there is a risk of getting hacked due to the fact that the service payment provides uses channels to authenticate the accounts which do not have the desired level of security making it extremely vulnerable. The other factors include spy and malware programs, the man in middle attacks and physical theft of the device. Losing the phone is like losing a credit card because it provides a direct access to bank accounts and anyone can transfer money before one knows it (Xu and