What is a Digital Wallet?

What is a Digital Wallet?

Digital wallets are exactly what they sound like, and they can be quicker and more secure than using physical cards or cash at checkout. You can set up your digital wallet and link your debit or credit cards in a few easy steps—making payments safer, faster and more convenient.

Digital wallets are apps or online services that allow you to make transactions electronically. You may access a digital wallet on your phone, laptop or other compatible electronic devices.

Your digital wallet can often hold your debit cards, credit cards, loyalty cards, or even concert and airline tickets. This helps make it easier for you to access funds and information you need when you need it. Plus, it can eliminate the clutter of several plastic cards and speed up transactions with a simple tap, click or swipe of your finger.

Digital Wallet vs. Mobile Wallet

The terms “digital wallet” and “mobile wallet” are often used interchangeably. But they are slightly different. Digital wallet is an umbrella term that includes mobile wallets. In other words, mobile wallets are a type of digital wallet.

A digital wallet can store your payment information and be accessed on your desktop computer, laptop or mobile device. A mobile wallet is a type of digital wallet on a mobile device, like your smartphone or smartwatch. You can use mobile wallets to make contactless in-store purchases at a store’s physical checkout.

What types of Digital Wallets are available?

There are three main types of Digital Wallets: closed, semi-closed and open. They mainly differ in what types of transactions they allow.

• Closed digital wallets: You can only use closed wallets to make transactions with the wallet issuer. Amazon Pay is one example.

• Semi-closed digital wallets: With semi-closed wallets like Venmo and Apple Pay®, you can make transactions with a specified list of merchants and locations. Merchants and issuers have established agreements or contracts to enable digital wallet transactions.

• Open digital wallets: Open wallets work similarly to semi-closed wallets. One difference is you can also transfer funds and make withdrawals at financial institutions and ATMs. PayPal is a well-known example of an open digital wallet.

There are a variety of digital wallets available with varying features and transaction capabilities. Examples of digital wallets include:

• Apple Pay®

• Google Pay™

• PayPal

• Venmo

• Fitbit Pay™

• Garmin Pay™

• Samsung Pay®

View all of our 2023 - A Year of Financial Wellbeing Blog Posts.