What is a Digital Wallet?

Academy · 6 May 2020Revolut Contributor

What is a digital wallet and how does it work? How do I get a digital wallet? And is a digital wallet safe?

For the answers to these and other questions, read on.

What is a Digital Wallet and How Does it Work?

If you’re looking to simplify the many ways you pay for goods and services, a digital wallet could be the perfect option for you.

Combining your payment methods into one secure system, a digital wallet may soon become the centre of your financial universe. The best part? With a digital wallet, you no longer have to check to see if you have your physical wallet before heading out the door.

What Does “Digital Wallet” Mean?

Digital wallet definition:

A digital wallet (also referred to as an e-wallet) allows you to conduct electronic financial transactions using digital currency.

You can use it to either make in-store purchases with your smartphone or to buy online. And with the ability to store loyalty card information and discounts you’ve earned from specific outlets, a digital wallet provides secure, cashless convenience all in one place.

How does it work?

To ensure that your digital wallet has money in it, you can either top it up before performing transactions or simply link it to your bank account so that money flows directly from one to the other.

A digital wallet can come in the form of:

  • An electronic device
  • A mobile app (like Apple Pay or Google Pay)
  • Software that allows you to make online purchases

What’s the difference between a digital wallet and a mobile wallet?

Mobile wallets are specifically used for tap to pay transactions.

While both reduce the need for cash and bank cards, the fundamental difference between a digital wallet and a mobile wallet is scope. While digital wallets mean that you can perform a variety of transactions online and in-store, a mobile payment system fills a precise function: to allow you to make payments on-the-go using only your smartphone.

Think of your mobile wallet as just one way you can put your digital wallet into action.

Is a Digital Wallet Safe?

Digital wallets were designed with two things in mind – safety and simplicity.

Using up-to-date encryption technology, digital wallets guarantee that your payment information flows only in the directions that you authorise.

Because you don’t have to type your password in every time you use it, a digital wallet makes it possible for you to create more complex passwords that you don’t have to remember. Added to this, with a digital wallet, you no longer have to worry about your traditional wallet getting stolen, lost or damaged.

Don’t get complacent

That being said, it’s important to be vigilant when protecting your money. The same rules apply for a digital wallet that would to any other way of storing and transporting your funds.

First and foremost, always make sure that you stay on top of the money that’s flowing in and out of your account. It’s also important that you protect your digital wallet using a secret pin or fingerprint identification.

Now that you’re sure that you want a digital card wallet, the next step is finding out how to get one.

How Do I Get a Digital Wallet?

Digital wallets are simple to set up. Start by contacting your financial services provider to see what they offer.

From there, the process is simple:

  1. Choose your digital wallet provider.
  2. Enter your payment information which your e-wallet will store securely.
  3. Decide how you‘re going to use your digital wallet:
  • Download a mobile payment app so that you can use your digital wallet in stores for cashless payments; or
  • Use your digital wallet with an electronic device.

Did you know: Many people use digital wallets to store and spend cryptocurrencies.

If you’re interested in how crypto is revolutionising the way we do our personal banking, head on over to these articles:

The content of this page is for general information purposes only and does not constitute financial advice. If you have any questions about your personal circumstances please seek professional and independent advice. Revolut is not a financial adviser.

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