Digital wallets are software programs that store users’ payment information enabling them to make purchases and track their payment history on any device with a web browser. Mobile wallets are a version of the digital wallet. They exclusively store the users’ payment information on their mobile and smart devices.
Most digital wallets belong to one of two categories:
The first category is like a traditional card wallet. It holds the digital versions of a customer’s debit and credit cards.
The second category is stored-value account wallets — also known as “closed wallets.” These “closed wallets” are like prepaid cards. Customers can preload these separate accounts with funds to make payments or purchases.
How do digital wallets work?
Digital wallets store a digitized version of a user’s debit or credit card credentials. Some digital wallets will store a user’s banking information. This enables the consumer to make contactless payments using their mobile or smart device.
At a more granular level, different digital wallets use different technologies to function. For example, some use near-field communication to exchange information between devices, others send a secure magnetic transmission signal to payment terminals or QR codes to complete the purchase.
What else can digital wallets do?
Though they were initially designed to store payment details and/or banking information, the applications for digital wallets have expanded in recent years. Today, many digital wallets can store a wide variety of information, including:
Gift cards
Membership cards
Loyalty cards
Event Tickets
Coupons
Boarding passes
Hotel reservations
ID cards
Billing statements
As digital wallet technology becomes more advanced over time, many providers have incorporated additional features including tracking expenses, splitting payments, earning membership/loyalty program rewards or requesting a reimbursement.
What are mobile wallets?
A mobile wallet is a specific type of digital wallet in which all payment credentials, authentication information and funds are stored on a mobile phone.
What types of transactions do digital wallets support?
Digital wallets support a wide variety of transaction types, including:
Wallet-to-bank transfers
Third-party transfers
Special offers and promotions
Top-ups
Cash in / cash out
Contactless payments
Payment requests
Bill splits
Bill payments
P2P transfers
Balance and transaction inquiries
How popular are digital wallets?
Digital wallets have become incredibly popular with consumers. Here are some fast facts:
Digital wallet users are expected to exceed 5.2 billion globally by 2026, according to a study from Juniper Research
Global Market Insights reports that the mobile wallet market will reach a record valuation of 970 billion USD by 2023
Statista estimates digital and mobile wallets accounted for roughly half of all global eCommerce payment transactions in 2021
58% of global mobile wallet users report using their mobile wallet to make a payment at least once a week, according to the ACI Speedpay Pulse survey
ACI Speedpay Pulse also shows that 39.2% of consumers report using their mobile wallet to store non-payment items (digital tickets, identification, loyalty cards and billing statements)
5.2 billion
digital wallet users expected by 2026
58%
global mobile users make a payment at least once a week
58%+
consumers report using their mobile wallet to store non-payment items
Are digital wallets safe?
Yes. Most digital wallets incorporate multiple layers of advanced security to ensure the safety of users’ sensitive payment credentials, including but not limited to two-factor and multi-factor authentication, personal identification numbers, tokenization and biometric authentication.
What are the benefits of offering digital wallet payments?
Support the payment methods your customers want
Giving them the freedom and flexibility to make payments directly from their mobile devices, increasing satisfaction and loyalty in the process
Offer frictionless payment experiences
Empowering your customers to make in-store and online payments for a seamless, omnichannel eCommerce experience
Streamline the checkout process
Reducing cart abandonment rates by eliminating unnecessary payment steps makes it easier for customers to complete purchases
Reduce the risk of fraud
Mitigate fraudulent behavior and chargebacks using advanced security solutions like tokenization and biometric authentication
Eliminate the hassle of updating customer cards
Digital wallets securely store customers’ payment details for easy renewal, even if their card is lost, stolen or expires
How do digital wallets differ from digital currency wallets?
A digital currency wallet, referred to as a cryptocurrency wallet or a crypto wallet, is a digital wallet designed specifically to hold public and private cryptographic keys. Public keys enable others to make payments to a user’s wallet, while private keys enable users to make payments using their digital currency.
What are some of the leading digital wallets in the market today?
Some of the most popular digital wallets by region include:
Apple Pay Lydia Lyf Pay MobilePay Swish Twint Vipps
North America
Apple Pay Cash App Google Pay PayPal Samsung Pay Venmo
South America
Mercado Pago Nequi PayPal PagSeguro PicPay
How can merchants benefit from ACI’s digital wallet solution?
ACI Wallet Hub delivers a superior digital wallet experience for merchants and payment service providers. With a single integration, merchants can access over 200 wallets in over 70 countries, offering extensive global coverage across all channels, including eCommerce, mobile applications and in-store purchases.
