5 minute read

Your practical guide to accepting digital wallets

Friday, December 17, 2021

5 minute read

Editor's note: This article was updated on December 17, 2021 from its original publish date of January 16, 2020.

Digital wallets are officially mainstream.

eMarketer predicts digital wallet users will grow worldwide in the next four years. By 2025, their research projects an increase in 50 million users in China, 26 million in the US, nearly 3 million in the UK, and nearly 2 million in Canada.

Here we explain how digital wallets work, their benefits and ease of use, and what everyone from micro-merchants to global brands can do to accept them.

What is a digital wallet?

A digital wallet is a virtual version of your everyday wallet, storing a user's various payment types–credit cards, debit cards, bank account information, loyalty cards, and more–on an app or browser that can be accessed easily and quickly online or in-store to make a payment. Also referred to as a mobile wallet, digital wallets can be accessed by computers, smartphones, smartwatches, and other wearables. Popular digital wallets include Google Pay, Alipay, WeChat Pay, and Apple Pay.

While the ability to tap and pay with a mobile device at a compatible register looks like a snap, several technologies operate behind the scenes to enable digital wallets on mobile devices and at the point of sale. The good news? These technologies require no extra effort or an engineering degree to deploy and enable.

So how does it work? Here's a quick rundown:


While this section may seem a bit "in the weeds", we want to illustrate the inner workings of enabling digital wallets so you can have a better understanding of how the technology all works together to seamlessly enable this payment method.

Near-field communication (NFC) technology allows two enabled devices to communicate. For example, an NFC-enabled smartphone transmits encrypted financial data via tokenization to an NFC-enabled card reader (receiving device) at checkout to complete a contactless payment transaction. If you understood that, then you're a pro and don't need to read further. For the rest of us, let's peel back the jargon and translate this further.

NFC is the technology that enables contactless payment transactions like digital wallets or tap-to-pay cards to operate. Shoppers use their digital wallet to pay for purchases by simply waving or tapping their mobile device over an NFC-enabled card reader at checkout. If required, customers provide a passcode or finger scan to authorize the transaction. Once the NFC-enabled card reader receives the signal from the customer's mobile device, a secure element chip in the receiving terminal validates the transaction, which is then authorized by the processor.

Digital Wallets


Many computing software programs use encryption to keep data safe. Information is encoded (or encrypted) and can only be decrypted by a user with the correct encryption key, or token. Encrypted data will appear scrambled to a user attempting to access the data without permission. While not exclusive to digital wallets, this technology keeps consumers' personal and financial information safe and secure.


Used in conjunction with data encryption, tokenization is used to secure the end-to-end payment process, ensuring a consumer's financial information is never exposed. Personal data—including credit card number, expiration date, and checking account information—is disguised with a single-use token that acts as a stand-in data set to complete the transaction. That means a consumer's information is safe in the future from fraudsters since the code expires after one use.

Payment rails

Rather than creating a new system or process to conduct ecommerce, digital wallets take advantage of the traditional payment infrastructure–or payment rails–that already exists. This means the same networks and processors are involved in each transaction, providing greater reliability and allowing you to sell more, faster.

The benefits and ease of accepting digital wallets in-store and online

Regardless of your industry, businesses that accept digital wallets in-store or online consistently realize meaningful benefits. Advantages include a familiar experience for consumers, enhanced security, and a flawless customer journey that minimizes payment friction.

Because a customer's payment details are already stored in their digital wallet, you can simplify your online checkout process by accepting this payment method. Customers simply choose a stored card in their digital wallet, and then click to buy. This feature not only saves customers time but also prevents the hassle having to manually enter their payment information over and over when online—increasing your chances of conversions.

For brick-and-mortar businesses, digital wallet acceptance is very simple in most regions as long as your point-of-sale (POS) device is enabled for contactless payments. Customers can open their digital wallet from their smartphone, smartwatch, or other NFC-enabled mobile device, select their stored card of choice, and then hold their device near the NFC-enabled card reader to complete the transaction–no physical card, wallet, or purse required.

As more consumers adopt digital wallets as their go-to payment method, make sure your checkout is NFC-enabled, or upgrade soon in order to meet customers' payment expectations. Need more reason to upgrade to NFC-enabled devices? A recent study by Visa indicates that 48% of consumers won't even shop at stores that don't offer contactless payment options. Don't lose a sale simply because you didn't embrace digital wallets.

The numbers are clear—consumers are embracing digital wallets more and more, both online and in-store. Are you prepared? We make it easy for you to accept digital wallets. Our developer tools and cloud-based POS solutions enable secure and easy-to-use payment services, and our customer support teams can help with any questions you have along the way. Contact us today to get started.