Table of Contents
Introduction
Mobile payments have actually changed the way we handle money. We can now shop, send money to friends and even save up for the future within a few taps of our smartphones. One of the most exciting developments in mobile payments is the concept of digital piggy banks that are intended to assist people in saving in a new way. In this article, we will explore the world of mobile payments and how virtual piggy banks can assist people in the accomplishment of their financial goals.
The Rise of Mobile Payments
Over the past few years, mobile payments have increased dramatically around the world. According to estimates by Statista, the value of mobile payment transactions worldwide is set to touch $4.7 trillion by 2023. This increase has been attributed to several factors:
- **Convenience:** Mobile payments make it easy to do away with the hassle of carrying around a bulky wallet or the need to fumble with cash and credit cards. All that is required from users is a simple smartphone that they can use to make payments anytime and anywhere.
- **Security:** Some mobile payment solutions employ strong encryption techniques to secure users’ financial information, which is a higher level of security than that of other forms of payment.
- **Speed:** It is instantaneous — transactions are completed within seconds. This means that there are shorter queues at checkouts!
As a result of the increasing popularity of mobile payments, banks and technology companies are still developing new solutions and features to meet consumers’ needs. Among those is the emergence of the virtual piggy banks.
The Concept of Virtual Piggy Banks
Virtual piggy banks are the digital assistants that help in saving money in the virtual world. With the convenience of mobile payments, these tools are supposed to help people improve their saving habits. Here’s a breakdown of how virtual piggy banks function:
- **Dedicated Savings Account:** It opens a separate savings account within the mobile payment application, different from the main checking or savings account of the user.
- **Automated Savings:** Savings can be automated by setting up recurring transfers of money from the main account to the virtual piggy bank and thus create a rule-based saving regimen.
- **Goal Setting:** Goal setting is a feature that is offered by virtual piggy banks. From funding a vacation or saving up for a home to building an emergency fund, people can identify what they want to achieve and how their savings are growing.
- **Incentives:** Some virtual piggy banks reward saving by giving cash back or interest on the savings or even making it fun through gamification.
As a result of the combination of the simplicity of the mobile payment service and the rationality of saving, virtual piggy banks can be your reliable assistants in achieving your financial goals.
Case Study: Acorns
Let’s have a look at Acorns – one of the most famous virtual piggy banks. This widely used investment app has the unique ability to round up users’ purchases to the next dollar and then invest that spare change. Acorns has been a game-changer for saving and investing, demystifying and making it available to everyone. Here’s how it operates:
- **Round-Up Feature:** Acorns links your credit and debit cards to the application and then makes a round up of every purchase. For instance, if one person spends $3.50 on a coffee, Acorns will round it up to $4.00 and invest the remaining $0.50 on your behalf.
- **Automated Investing:** The spare change is invested into a diversified portfolio of exchange traded funds (ETFs). Users can also choose different investment products that suit their risk appetite and investment goals.
- **Recurring Investments:** Recurring investments are a feature that allows users to make additional and regular investments to improve their savings and foster positive financial behaviors.
- **Education and Support:** In addition, Acorns offers educational materials and suggestions to help users make the right investment decisions and, therefore, manage their finances better.
