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Digital Wallet at One Glance

The picture of someone counting coins at the checkout is getting rare. Most often people use credit and debit cards to pay for their purchases. At the same time, there are those who have already adopted the next-level approach to payments — digital wallets.
What is a digital wallet and why to use it? In this blog post, we will answer these questions as well as highlight some of the most popular digital wallet apps.

How to use a digital wallet

Let us begin with a digital wallet definition. It is an app that stores user’s data and allows making different types of transactions: from paying at the checkouts and online stores to peer-to-peer money transfers. A digital wallet can fully replace your physical wallet by storing everything you have inside: banking cards, transportation passes, driving license, bonus cards of different shops, tickets to events, etc. There is also a crypto digital wallet — the one that stores keys to get access to and manage different cryptocurrencies.
In order to use it, you should install the digital wallet software on your device. Mainly it is a mobile app you download to your smartphone but it can also be used on a personal computer. After the installation, you have to add your payment and other types of cards as well as import tickets, identification documents, driving license, and everything else that you need and allowed by the chosen app. When the bank confirms your cards’ information, you can use the smartphone to pay wherever you want.

How does a digital wallet work?

In order to use your digital wallet to pay, you have to check whether there is a contactless payment symbol at the checkout. If yes, you can simply put your smartphone close to the payment terminal — the devices will communicate with each other utilizing the NFC (near field communication) technology. It is supported by all modern smartphones. To complete the transaction you might need to confirm it by tapping the required button in the app or entering a password.
One more way to pay via a mobile device is scanning the bar codes to retrieve all the information you need: from the billing data to the bonus card balance.

Digital Wallet Advantages and Disadvantages

Now we are going to see the opportunities the digital wallets offer as well as discuss their drawbacks.

Benefits of a digital wallet

The features of digital wallets bring value both for ordinary users and businesses. Here is the list of the most significant ones:

Improved comfort

Having all the necessary cards and other important data in an app, there is no need for keeping dozens of cards and papers inside of a wallet, purse or backpack as well as for wasting time searching for them. Everything you need is close at hand, easily managed, and easy to use.


Such an app allows the queues in the stores to move faster since the payment is done in less than a minute. In case of online shopping, the digital wallet saves time on entering the credit card details and identification because everything is already confirmed within the app.

Better expenses tracking

The information about all the transactions you do is stored inside the app which allows you to analyze it after each week or month in order to control the expenses better. If it is hard for you to stay in a budget, you can set up the limits for particular categories of expenses that will prevent you from wasting too large sums of money.

Enhanced security

All the data you have in the app is encrypted and never sent to third-party organizations. So, the online market you shop at will never know the details of your payment. Moreover, the transactions have to be confirmed by you (fingerprint, password) and the digital card wallet is additionally protected by your device’s security system (Face ID, fingerprints, passwords). It means that if someone steals or finds your smartphone, it would be hard to get access to your money (unlike in case of losing your wallet with all the cards and money).

Special rewards

Some of the digital wallet platforms provide users with additional bonuses and special offers in order to stimulate the utilization of their app. It means you not only get a chance to pay for your purchases faster and simpler but also get pleasant perks.

Lower costs

This benefit refers mainly to companies like stores that hire people to complete sales and take the customers’ money. The growth of the digital wallet market will possibly eliminate the need for cashiers at the checkouts saving companies a lot of money each month.

Disadvantages of a digital wallet

Along with the perceptible advantages, the digital wallet revolution also brings some drawbacks to consider. Here are the main of them:

Time and money investments

In order to allow the customers to pay with digital wallets, the companies have to get special hardware or software facilitating those operations. Those companies that want to develop their own digital wallet solution need to find software engineers with relevant experience and spend money and time on the development.

Limited merchants

Due to the reasons we mentioned in the previous point, not all the merchants support digital wallets. The adoption of digital wallets by consumers and businesses also depends on the popularity of particular applications: one will likely be able to pay via Apple Pay than Chase Pay.

Dependency on a device

It is very convenient to have everything you need inside of a smartphone unless it gets out of charge, breaks down or has problems with the network connection. If the device turns off right before the checkout, you would better have a credit card or paper money in the pocket.

Reckless spendings

Even though digital money has been around for a while, some people still tend to spend more when they cannot see and touch real money. It means that regardless of the ability to monitor and analyze their spendings within the digital wallet application or in an online banking account, it might be challenging to control your budget.


We have already mentioned security as a benefit of digital wallets but there are more things to consider. Since the app’s security is supported by the devices, it is crucial to ensure your smartphone’s strong protection. Otherwise, it will not be difficult to use your digital wallet account in case your smartphone is lost or stolen. Another significant moment here is to pay attention to the digital wallet provider — it has to be trustworthy.

Different Types of Digital Wallets

It is time to see some examples of the most popular digital wallet apps. We decided to highlight several types of these applications.


This group includes the applications developed for devices of a certain brand: Apple Pay (iPhones), Google Pay (the analog of Apple Pay for Android devices), Samsung Pay (for Samsung devices), Microsoft Wallet. These applications allow connecting credit and debit cards in order to pay online or at physical stores by putting the smartphone or even smartwatch to the payment terminal.

Bank’s and card provider’s apps

The mobile banking applications, as well as the apps from credit card providers (Mastercard Masterpass, Visa Checkout), also cover the functionality of digital wallets.


Here is a category of stand-alone applications that are developed for payments rather than for enhancing the services of companies with another specification. Probably, the most popular one is PayPal which is reliable, safe, and widely spread across consumers, merchants, and countries. We would also mention Venmo (now belongs to PayPal), Chirpify, Adyen, Chase Pay, Due.

The Bottom Line

Despite having some disadvantages, digital wallets will keep gaining popularity as the most up-to-date and convenient payment solution. If you want to reap the maximum benefits of this digitalization or interested in the digital wallet app development, SCAND is here to help. Our team has created a number of solutions for the banking and finance industry and will be glad to share its expertise. Contact us to ask any questions!


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