Mobile & Digital Wallets

Have you heard of mobile or digital wallets? With the rise of new technology and in this digitally savvy generation, almost everything is becoming cashless and paperless. Money as a means of payment has also evolved along history and has become less physical and more digital. Also, since the rise of smartphones in 2014 as the dominant tool for accessing the internet all over the world, even commerce is going mobile. Most of us use digital or mobile wallets in our everyday transactions without knowing it.

Do you make online transactions with your mobile?
If yes, that is a digital or mobile wallet.
If no, here are a few things you have to know about the digital or mobile wallet.


Here are some examples:

  • Online shopping
  • Bill payments (utility bills, recurring payments)
  • Booking of tickets (from movie to travel tickets)
  • P2P money transfer
  • Mobile recharge (cell plan top-up)
  • In-store purchases
  • Loyalty and Membership Rewards


A digital wallet is a software application that serves as an electronic version of a physical wallet. It offers secure enrollment of the user and secure provisioning of credentials. It offers the user an opportunity to securely provide and store customer identity- and payment-information as well as shipping details.

Digital wallets are often used interchangeable with mobile wallets but there is quite a little difference between them and their implementation is somewhat different. Digital wallets are used mostly for online transactions which may not necessarily involve the use of mobile devices.

Mobile wallets can be standalone or specific implementations of a digital wallet for smartphones. A mobile wallet is a way for one to carry their personal information such as payment card credentials or rewards membership information in a digital form on a smartphone.

Mobile wallets are used by people who would rather not carry physical cash and cards when making in-store purchases or collecting loyalty rewards. For this reason, these digital wallets are provisioned on smartphones and other easy to carry platforms (e.g. Wearables).

Online digital payments include ApplePay, google wallet/AndroidPay, amazon checkout and PayPal.The beforementioned are all digital wallets but, except for Amazon’s Checkout, also offer mobile wallets for use in conjunction with (e.g.) loyalty points and rewards collection and mobile payment in the retail environment.

Therefore the most commonly known examples of mobile wallets today are
Android Pay, Apple Pay and Samsung Pay.


Mobile wallets are very easy to open, use and operate, especially on a smartphone. All you have to do is download the application from an app store (when it is not already in-built on your mobile device). After downloading the app, add your credit or debit payment card and loyalty cards information to it. Add any other information you are asked to (e.g. shipping details, preferences etc.) ), and then you are good to start using the app for all your mobile transactions. Mobile Wallets do not necessarily require internet access.

A digital wallet can be opened against a phone number and/or an email address. The user can preselect a payment method within the Digital Wallet application to execute commerce transactions. Digital Wallets always require internet access.


There are basically four methods in making payment at the Point of Sale with mobile wallets.
These are either through NFC, QR-Codes, Apps or Bluetooth:

  • Near-Field Communications (NFC):
    NFC-enabled smartphones communicate credit card data to an NFC contactless transmitter attached to or buit into the POS device.
  • QR-Codes:
    Some mobile payment service providers offer their customers a QR-Code based system as an alternative to NFC, which enables payment information to be stored in the cloud rather than on the handset. This can be executed on any smartphone with a camera and internet access.
  • Payment Apps:
    Some mobile wallet applications allow customers to pay at eligible stores using only their photo as a means for payment authorization on a preselected credit card that is stored in the app (or its cloud backend) and when activated in an enabled location (merchant). The cashier will see the customer’s username and photo in the register, and the customer can then pay by simply stating his or her username to the cashier. These wallets can therefore only be used at stores that utilize the app maker’s point-of-sale register system
  • Bluetooth:
    The Bluetooth Low Energy (BLE) enables Bluetooth 4.0 based smartphones to communicate via BLE-based wireless transmitters known as Beacons. These Bluetooth Beacons enable the POS to communicate the trader’s information such as the number of the store and the payment due to the customer’s smartphone.


The perks of using a digital or mobile wallet for your transactions are enormous.

Here are a few of them:

  • It is a faster means of making payment. With digital or mobile wallets, you don’t need to be filling out forms or wait in a queue before payments can be made. With digital wallets, you can quickly pay for any purchase you make with the tip of your finger.
  • It is a very safe way of making payments. A digital wallet has a software/hardware component (Secure Element) that provides security and encryption for the personal information and actual transaction. It increases the security of transaction as you don’t have to put you credit card details to every payment and this reduces the risk of exposing your credit card information to fraudsters, merchants or the website.
  • Digital wallets do not charge any transaction or usage fees.
  • With digital and mobile wallets, you don’t need to carry your purse full with physical cash and credit cards around.
  • You can have more than one wallet on your phone.
  • Digital and mobile wallets offer lots of reward and discount options to customers.
  • Mobile wallets serve as channel for distribution and also for redeeming offers, coupons, discounts and promotion.
  • Mobile and digital wallets can also be used for storing information because it has an information component.
  • Mobile wallets enable consumers to store payment card details on their mobile device, which they can use to make point-of-sale or online payments.
  • Mobile and digital wallets provide financial institutions with opportunities to deepen customer relationships. It also enable them protect their customers and the institution from fraud.
  • In some cases, wallet providers can generate revenue by taking a commission on sales made through the wallet.
  • Finally, mobile wallets usually offer a top-up system, where you add money upfront using an alternative source of funding before you can spend it, without the use of credit cards altogether.


There is no technology without its risks. While there are enormous benefits in using digital or mobile wallets, there are also some risks involved.

Here are some of the risks:

  • Mobile phones gather more and more personal information from customers which – aggregated – could help carry out sophisticated (e.g.) identity theft attacks.
  • Fraudsters could also find ways to install malware (apps) on the mobile device by social engineering a victim to open a malicious attachment in an email and by redirecting the user to a malicious URL.
  • There is also the risk of unauthorized access to a lost or stolen mobile device.


In all, despite the risks involved in using mobile and digital wallets, the benefits outweigh the risk. Furthermore, for security reasons, many of the mentioned mobile payment wallets utilize tokens in the app (and store the credit card in the cloud) so that there is only a limited risk of losing your real credit card and credentials. They also use two-way authentication (e.g. ‘Apply pay token plus fingerprint to authorize the contactless (NFC) transaction’).


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