Digital wallets have become popular and their use is widespread stated Bahaa Abdul Hussein. The popularity of smartphones has ensured that digital wallets were adopted worldwide. While there is no doubt about the benefits of digital wallets, there is a question about the legality. What are the legal issues and regulatory issues related to digital wallets? We look at the answer to this question.
Digital wallets – legal and regulatory issues
Digital wallets are a substitute for physical wallets. Instead of using paper money, transactions can be done online by using your mobile phone or other device. The device would have an app that would help you carry out transactions. You can connect to your banking account through the digital wallet. It is convenient and easy to use offering many benefits.
There are many issues related to digital wallets that need careful consideration. These include:
- Security of customer data.
- Consumer protection.
For all these issues, regulation is needed to ensure uniformity. Since these issues involve legal elements, it is also important to look at the legal aspects.
Legal and regulatory issues related to digital wallets vary from one country to another. In the EU (European Union), PSD2 or Payment Services Directive 2 is the applicable regulation. It has rules related to authentication, consumer rights, data protection, and dispute resolution. In the US, federal as well as state laws govern the use of digital wallets. Consumer protection, antitrust, anti-money laundering, and consumer protection are issues addressed.
Regulatory in all countries need to have clear-cut regulation to govern the use of digital wallets. Such regulations will protect the rights of customers and ensure they have a consistent experience while using the digital wallets. Some of the measures that regulators and industry associations can take in this regard include;
- Co-ordinate with other agencies to create consistent policies.
- Ensure effective collaboration between all stakeholders like banks, card networks, merchants, payment service providers, and customers.
- Ensure the rights of customers especially with respect to privacy and data security are addressed.
- Ensure that parties follow best practices to safeguard consumer interests.
Conclusion
Legal and regulatory issues related to digital wallets vary from country to country. It is important to understand the issues prevailing in your country before using the wallets. While wallet providers ensure security, as a user you must be aware of the legal and regulatory issues. This knowledge will help you handle any problems you face while using the digital wallet.
The blog has been authored by Bahaa Abdul Hussein and has been published by the editorial board of Fintek Diary. For more information, please visit www.fintekdiary.com
