A digital wallet allows users to make electronic payments by storing payment information and identifying credentials securely on their device or online. It hides the complexity of payment processing from the user and can manage multiple payment options and IDs from one place. Digital wallets are either client-based software installed on a user's device or server-based where a company maintains the wallet information online. Both provide convenience for users and benefits for merchants through automated forms and payment processing. Emerging technologies like near-field communication enable new ways for digital wallets to securely complete transactions wirelessly.

2. Finding particular items is time consuming.

3. Evocating a lost wallet is extremely hard.

4. Managing multiple monetary and identification implements is not easy. Monetary implements include cash, debit and credit cards, and stored value cards while identification includes national or state identification cards and driver’s licenses.

6. The software provides security and encryption for the personal information and for the actual transaction.

7. Normally, digital wallets are stored on the client side and are easily self-maintained and fully compatible with most e-commerce Web sites.

8. A server-side digital wallet, also known as a thin wallet, is one that an organization creates for and about you and maintains on its servers. Server-side digital wallets are gaining popularity among major retailers due to the security, efficiency, and added utility it provides to the end-user, which increases their enjoyment of their overall purchase.

10. automatically fills forms at Online stores

11. merchant install software to receive client based wallet information

12. when consumer clicks merchant’s site merchant queries consumer’s digital wallet

13. more difficult to update as download required merchant’s form changes

15. Financial Institutions market the system to merchants as part of their financial service package

16. Technology services ( infrastructure for processing payments) & Wallet services provided.

17. Easy & secure shopping using whichever payment method consumer desires

18. Lower transaction cost

19. Lower consumer acquisition & retention costs

20. Dynamically updates as merchants form change

21. Consumer provided with Single Sign-In Service(SSI)

23. New NFC (Near Field Communication) chips are already appearing in smartphones which provide very close range, low power, easy to setup up point-to-point communication.

24. NFC acts as the communication medium for exchanging monetary and identification information, such as credit card numbers and receipts, with other devices.

25. Fast Secure Authentication and Secure Tamper Proof Storage

26. Secure programmable chips in cell phones will allow the cell phone to securely store both “digital cash” and the phone owner’s monetary and identification implements.

28. A NFC-compatible “reader pad” can be deployed in retail stores.

29. When payment is required, consumers place their cell phone on/near the pad and all their valid payment options appear on a display.

30. They can then select the payment method they plan to use (cash, specific credit card, etc.) for the transaction.

31. The pad transmits the transaction request to the appropriate financial institutions using existing banking protocols provided by NETS, Visa, Amex, and MasterCard.

32. The consumer can provide any necessary signatures using a digital signature pad located next to the reader pad.

33. Once the transaction is verified and completed, the receipt is automatically sent to the cell phone and stored for future reference.

34. For peer-to-peer cash exchange :-

35. Use the phone’s NFC capability together with an easy to use peer-to-peer cash application.

36. Using the application, the payer can enter how much cash he needs to send to the other person.

37. The payer then taps the cell phone of the payee and the cash is transferred instantaneously using NFC.

39. The anonymity factor is crucial for consumers who, for various reasons, want certain transactions to remain anonymous while the spending limit is used, for example, by parents to limit their children’s spending.

40. Supporting cash transactions require two key technology components :-

41. Place cash in the digital wallet either by :

42. Topping-up the cash on device at specific top-up machines which are integrated with existing automated teller machines

43. Online by logging into bank’s online portal and transferring cash into phone.

45. The Protocol Manager manages all of the protocols that the wallet may use to accomplish various operations, and invokes protocols to carry out the interaction between the digital wallet and the vendors and banks. The Protocol Manager relies on the Communication Manager to process low-level communications requests with other computers representing banks and vendors.

46. The Wallet Controller presents a consolidated interface for the wallet to the client. The Wallet Controller hides the complexity of the other components of the wallet, and provides a high-level interface to the client. A non-human client, or software agent, can make method calls on the Wallet Controllers interface through the Client API. A human client may use a graphical user interface (GUI), which may make method calls on the Wallet Controller. The Wallet Controller coordinates the series of interactions between the User Profile Manager, Instrument Manager, and Protocol Manager necessary to carry out high-level requests received from the client, such as purchase a product.

47. The User Profile Manager manages information about clients and groups of clients of the wallet including their user names, passwords, ship-to and bill-to addresses, and potentially other user profile information as well. In addition, the User Profile Manager keeps access control information about what financial instruments each user has the authority to access.

48. The Communication Manager provides the wallet with an interface to send and receive string messages between wallets and peer commerce components by setting up a connection with a remote Communication Manager. The Protocol Manager builds on top of the connection abstraction to support the concept of a session. A connection is typically asynchronous, while communications between peer commerce components in a Session occur in (message, response) pairs where one peer sends a message, the other peer receives the message, executes some action, and returns a response. Depending upon the implementation of the Communication Manager, the messages may be sent over different types of networks using different communication protocols.For example, one implementation of a Communication Manager may send and receive messages over the Internet using HTTP requests and responses over a TCP/IP Ethernet network. In this case, a Session may be made up of a sequence of several HTTP GET messages and their corresponding responses. Note that the Protocol Manager is responsible for making calls to the Cryptographic Engine to encrypt any data that is passed to the Communication Manager, such that the data can be securely transmitted over the communications medium. The Communication Manager cannot be responsible for encryption of sensitive data from the wallet because it is formally outside the wallet architecture, and can be replaced by another Communication Manager to run the wallet on another device. If the Communication Manager is relied upon to encrypt sensitive data, then the Communication Manager might be replaced with a malicious Communication Manager that sends all sensitive data to an adversary.

49. The Client API is an interface provided by the Wallet Controller that may be used by an autonomous software agent acting on behalf of a human user.

51. Instrument Class Negotiation

52. Protocol Negotiation

53. Protocol Selection

54. Instrument Selection

55. Transaction Execution

57. The Cards module is used for storing personal card information, such as payment card (credit, debit, etc.), loyalty.

58. The card details consist of card info (name, number, etc.), account info (billing address, etc.) and shipping info (shipping address, email, phone number, etc.).

59. From the wallet, the user can fetch the required information (stored in the ECML: Electronic Commerce Modeling Language) format via the WAP browser and easily fill in the required fields.

60. The Personal notes function is a notebook where the user can store private information.

62. Provide retailers with a single NFC-enabled point-of-sale device that replaces the current separate machines for credit cards and debit card purchases.

64. Ensuring a mass market appeal for the digital wallet is important to leverage scale economies and the network externality effect. One way to increase the mass market appeal is to make the digital wallet usable for all day-to-day transactions. Hence it is important to support both point of sale transactions and peer-to-peer transactions between individuals. Both of these require support from financial institutions, retailers and government bodies; coordinating these stake holders is a real challenge.

65. Stake Holder Dynamics:

66. Any successful digital wallet deployment will need the cooperation of multiple stake holders such as banks, retailers, regulatory bodies, and consumer. This is a challenge because satisfying the business and strategic goals of multiple stake holders is difficult. For example, bank A may choose not to be a part of a consortium where competing banks play a leading role. In addition some stake holders may have already invested in alternative technologies and may not be in a position to make further investments. Achieving buy-in from all stake holders may require the support of the government and regulatory bodies.

67. Compelling user experience:

69. The electronic wallet will be able to facilitate purchasing from mobile phones and PDA’s. The poor user input of mobile phone keypads is presently a barrier to mCommerce. The electronic wallet can minimize the number of key clicks required to purchase from these devices by automating the online purchasing process.

70. Price comparison shopping

71. The electronic wallet will allow comparison shopping at any Internet access point. This will be used for online and offline purchasing. It is now possible for a consumer to access price comparison services from a mobile device while shopping at a physical location. This will provide true price transparency and consumer control.

72. Bill Payments

73. The electronic wallet will be able to make bill payments on behalf of the user. This will include scheduling payment intervals for electronic bills and invoices and receiving bill reporting from any Internet access point.

74. Loyalty Redemption

75. The electronic wallet will give consumers realtime reporting of points accrued under loyalty schemes and their conversion entitlements. This will actually promote a convergence of loyalty schemes and may lead to loyalty points becoming fungible with value.

76. Personal Information Access

77. The electronic wallet will become a single access point to all personal information. This will including medical, insurance, motor vehicle, mortgage, superannuation and investment reporting. This is the personal financial portal which we have all been waiting for. This information aggregation will also extend to online auction monitoring and online gaming.

78. Virtual Personal Organizer

79. The electronic wallet will store the user’s calendar, contacts, tasks and lists on the network allowing this to be retrieved and updated from any device. This will eliminate the need to hot-sync.

80. Wireless purchasing at physical locations

81. The electronic wallet will allow purchasing in physical stores when the wallet is installed on an infra-red or blue-tooth device. The electronic wallet software will retrieve a person’s credit card number from the network and use the native capabilities of the device it is running on to transmit the credit card number to a Point of Sale unit.

82. Pre-emptive Purchasing

83. The electronic wallet performs the purchasing process for the consumer and therefore has a record of purchases made. The electronic wallet will be able to pre-empt purchasing based on habits and actually remind the consumer to make purchases on a regular basis.

84. Device to device Person to Person Payments

86. Thin is in, The future of Digital Wallets, byChristina N. White for SapientNitro.

87. Digital Wallet Technology, by Riyazuddin Khan.

88. SWAPEROO, A Simple Wallet Architecture for Payments, Exchanges, Refunds, and Other Operations by Neil Daswani, Dan Boneh, Hector Garcia-Molina, Steven Ketchpel, Andreas Paepcke from Stanford University.

89. http://en.wikipedia.org/wiki/Digital_wallet

90. Digital Wallet: Requirements and Challenges by Rajesh Krishna Balan, Narayan Ramasubbu, Giri Kumar Tayi from Singapore Management University and SUNY at Albany.