What Is a Digital Wallet?

Digital Wallet Explained in Less Than 4 Minutes

Woman paying with an app in store

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A digital wallet is an electronic service that stores and protects your bank and credit card information while allowing you to make contactless payments at a store, online, or within apps.

A digital wallet is an electronic service that securely stores your bank and credit card information along with other account details on your smartphone, smartwatch, or computer. A digital wallet can also be used to store and easily retrieve event tickets and other documents.

Definition and Examples of Digital Wallet

A digital wallet is an electronic service that stores and protects your bank and credit card information while allowing you to make contactless payments at a store, online, or within apps. When you're using a digital wallet, you won't have to swipe your credit card or enter your credit card information.


A digital wallet stored on a mobile device such as a smartphone or smartwatch is called a mobile wallet.

Apple Pay is a type of digital wallet that can be used on Apple devices. Once you've stored your card information in Apple Pay, you can use the digital wallet to make payments in person using your iPhone or Apple Watch, as long as the retailer has the right equipment. Or you can make purchases online or in the app when you see the Apple Pay logo.

How Does a Digital Wallet Work?

Digital wallets allow you to complete transactions in less time because you don't have to pull out your payment card for online or in-store purchases or ATM transactions. On top of your preferred payment methods, some digital wallets allow you to store airline boarding passes, movie tickets, coupons, rewards cards, ID cards, and even car keys. Certain passes or tickets inside your digital wallet may be readily available based on your location. Or you can open the digital wallet to find the appropriate pass and scan it.


Your actual account information isn't stored on your device so businesses won't receive your full account number when you're making purchases.

To make an in-person payment with your phone or smartwatch, hold your device near the contactless-enabled credit card reader. Your device and the payment terminal send encrypted information to each other using radio frequencies.

Digital wallets include:

  • Apple Pay
  • Fitbit Pay
  • Garmin Pay
  • Google Pay
  • PayPal
  • Samsung Pay
  • Venmo
  • Zelle

Alternatives to Digital Wallets

If you're not keen on the idea of using a digital wallet, there are other options.

Contactless Cards

Credit and debit cards with built-in contactless technology allow you to make in-person purchases by holding your card over a contactless reader rather than swiping your credit card. They don't require any additional setup.

You'll know whether your card can be used for contactless payments by the contactless symbol of four curved lines on the card, which has become the universal symbol for contactless functionality. Check with your bank or credit card issuer if you're not sure whether your card can be used for contactless payments.

Retailer Apps

Many store and restaurant apps include a wallet feature that allows you to order and pay from the app with a loaded gift card balance or linked credit or debit card. These brand-specific apps aren't as versatile as a digital wallet or contactless card since they're exclusive to a single store or restaurant. Most apps are linked to the brand's loyalty program, allowing you to earn rewards you can apply to future purchases.

How To Get a Digital Wallet?

Many smartphones come with a digital wallet preinstalled that only needs to be activated and set up. Apple Pay, for example, is standard with iPhones. If you don't have a wallet app on your phone or you prefer to use another one, you can visit your app marketplace to download your preferred wallet.

Next, open the wallet app and look for an option to add a new card, then follow the prompts to add your card. You may receive a text or email from your card issuer to confirm you're adding the card to a digital wallet. Once your bank verifies your card, you're ready to start using your digital wallet.


Depending on your device, a digital wallet can hold between eight and 12 cards. Some types of payment cards may not be eligible for a digital wallet.

Depending on your device, you can customize your security settings to prevent your wallet from being used without your permission. For example, you can require a fingerprint scan, iris scan, PIN, or password depending on your wallet and your device.

Key Takeaways

  • A digital wallet is a payment system that stores payment information or ticket information on a smartphone or another device.
  • Digital wallets allow you to make contactless payments by holding your phone or watch near a compatible payment terminal.
  • Some digital wallets allow you to conveniently store and retrieve tickets or boarding passes.
  • Contactless credit and debit cards or brand-specific smartphone apps are alternatives to using a digital wallet.
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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Apple. "How To Use Wallet on Your iPhone, iPod Touch, and Apple Watch." Accessed September 7, 2021.

  2. Google. "Use Flight or Event Tickets." Accessed September 7, 2021.

  3. Capital One. "What Is a Digital Wallet, and How Does It Work?" Accessed September 7, 2021.

  4. Visa. "Tap To Pay With Visa Contactless Payments." Accessed September 7, 2021.

  5. Samsung. "Add Credit or Debit Cards to Samsung Pay." Accessed September 7, 2021.

  6. Apple. "Set Up Apple Pay." Accessed September 7, 2021.

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