eWallets and mobile wallets are often mistaken as interchangeable, but they have distinct features that make them suitable for different payment needs.
We’ll break down the differences between eWallets and mobile wallets, exploring their benefits, key functionalities and ideal use cases, providing a comprehensive understanding of digital wallet vs mobile.
What is a digital wallet?
A digital wallet is a broader term that covers all forms of digital storage for payment methods, identification documents and even loyalty cards. It can include eWallet like functions i.e. payments but also extends to storing non-payment items.
Digital wallets are often integrated with devices (like smartphones and wearables) and allow for more comprehensive digital storage and identity verification.
Digital wallets are much more multifunctional and support a wide range of use cases, including contactless payment in-store, mobile banking and even secure document storage.
What is an eWallet?
Simply put, an eWallet or electronic wallet, generally refers to software or an app that lets users securely store virtual versions of physical payment instruments, such as credit or debit cards. They let users make purchases online and offline.
Funds for payments are linked to a bank account, card or even a prepaid balance within the eWallet.
eWallets can also be more narrowly focused on transferring money electronically and are often more integrated with specific financial services, like PayPal for payments.
Key features of eWallets
- Secure Digital Currency Storage: Safeguarding the digital assets stored within an eWallet, often with advanced encryption.
- Online Transactions: Allowing quick and easy payment for goods and services online.
- Flexible Payment Options: Supporting various payment methods, such as BNPL, for customer convenience and retention.
- Peer-to-Peer Transfers: Money can be sent instantly to other users.
- Multi-Platform Accessibility: eWallets can be easily accessed on mobile, desktop and more.
- Enhanced Security Protocols: Protecting user and payment data with multiple security layers, ensuring secure transmission and storage during transactions.
Examples of eWallets
- PayPal: A popular digital payment platform that allows users to send, receive and store money securely for online purchases, transfers and payments.
- Venmo: A mobile payment app primarily used in the U.S. for peer-to-peer money transfers, making it simple to split bills or pay friends with a social media-like experience.
- Skrill: An international digital wallet that enables quick and secure online money transfers, often used for online shopping, gambling sites and cryptocurrency trading.
What is a mobile wallet?
A mobile wallet is a payment tool specifically designed for use on smartphones.
It focuses primarily on contactless, in-store payments through near-field communication (NFC) technology or QR codes, streamlining physical transactions of personal and financial information.
Many merchants now support mobile wallet transactions, which benefits both consumers and merchants, making it essential for businesses to accept mobile wallet payments.
Mobile-centric usage
Mobile wallets are designed to work seamlessly on smartphones and smartwatches, making them ideal for users on the go.
They allow users to quickly make payments at physical locations without needing to carry credit and debit cards or cash.
The mobile-centric nature also ensures compatibility with wearable technology, enabling payment through smartwatches and fitness trackers, adding an extra layer of convenience for users.
Contactless payments
A standout feature of mobile wallets is the ability to perform digital wallet payments, including contactless payments using Near-Field Communication (NFC) technology or QR codes.
NFC allows the device to communicate with a payment terminal when brought close to it, facilitating a smooth and quick transaction.
QR codes offer an alternative, allowing users to scan a code with their mobile wallet app to initiate a payment, particularly popular in regions where NFC infrastructure is limited.
Integration with mobile apps
Mobile wallets are often integrated with a variety of mobile apps, allowing users to link their payment methods to services like ride-hailing apps, eCommerce platforms and loyalty programs.
This integration enables users to pay for services directly within the app, without needing to manually enter payment details every time, making online purchases more convenient and secure.
Mobile wallets also enable businesses to offer special promotions, discounts and loyalty rewards directly through the wallet interface, enhancing customer engagement.
Security features
Mobile wallets come with advanced security measures such as biometric authentication, including fingerprint scans and facial recognition, which make transactions safer.
Additionally, most mobile wallets use tokenization, replacing sensitive card details with encrypted tokens, so actual card numbers are never exposed during transactions.
This ensures a higher level of security compared to traditional payment methods.
Examples of mobile wallets
- Apple Pay: Apple's mobile wallet enables users to make payments with their iPhones, iPads, and Apple Watches using NFC technology.
- Google Pay: Available for Android users, Google Pay offers contactless payments and integrates with various apps and online services.
- Samsung Pay: A versatile mobile wallet that not only supports NFC payments but also works with traditional magnetic strip terminals, offering wider compatibility.
How digital wallets work
Digital wallets operate by securely storing your payment information, such as credit and debit card numbers, in an encrypted environment.
When you want to make a payment, you simply select your digital wallet as the payment method. The wallet then transmits your payment information to the merchant, who processes the transaction.
Advanced security features like encryption and tokenization ensure that your data is protected throughout the process. Encryption scrambles your information, making it unreadable to unauthorised parties, while tokenization replaces sensitive card details with encrypted tokens, adding an extra layer of security.
How do you pay with an eWallet?
To use an eWallet for payments, users typically log into the digital wallet app or platform on their chosen device (which can be mobile, desktop, or tablet).
They can then select their stored payment method, whether it’s a bank card, debit cards, cryptocurrency, or stored balance and use it to make online transactions.
eWallets are particularly useful for eCommerce, subscriptions and peer-to-peer payments.
The process is completed within the app or through a secure web interface, making eWallets ideal for digital purchases.
How do you pay with a mobile wallet?
For mobile wallets, payments are typically made in physical stores through contactless technology.
A user opens their mobile wallet app (e.g., Apple Pay, Google Pay), selects the payment card they want to use and holds their smartphone or smartwatch near a contactless payment terminal.
Biometric authentication (like fingerprint or facial recognition) or a secure passcode is used to authorise the digital wallet transaction, ensuring that the payment is both quick and secure. Mobile wallets make it possible to pay without needing physical cards or cash.
Key differences of eWallets vs. mobile wallets
Device compatibility
eWallets can be accessed on a variety of devices, including mobile phones, desktops, tablets and sometimes even smart TVs. Mobile wallets in contrast are primarily designed for smartphones and wearables (like smartwatches), making them ideal for on-the-go and in-store payments.
Usage scenarios
eWallets are best suited for online transactions, including eCommerce, peer-to-peer payments, and cross-platform usage. They allow users to store a virtual version of physical cards and manage payments through various mobile devices.
Mobile wallets are fully optimised for contactless mobile payments in physical stores, allowing users to make quick and secure payments with a tap or scan of their mobile device.
Security measures
eWallets rely on encryption, multiple layers of authentication and secure web interfaces to protect user data during online transactions. While mobile wallets use biometric authentication (e.g., fingerprint, facial recognition) and tokenization, which replaces sensitive card and payment information with encrypted tokens for added security during in-store payments.
Integration with other services
eWallets often integrate with online and mobile banking services, cryptocurrency platforms and peer-to-peer payment systems like PayPal or Venmo. They are flexible across multiple platforms and payment options.
Mobile wallets typically integrate with other mobile apps, allowing users to connect to loyalty programs, store digital coupons, or participate in app-specific promotions.
Their primary focus is on providing a seamless payment experience for in-store and mobile-based transactions.
Advantages and challenges of digital and mobile wallets
Digital and mobile wallets offer numerous advantages, making them a popular choice for modern consumers. The convenience of making quick payments without carrying physical cards or cash is a significant benefit.
Additionally, these wallets provide enhanced security features, such as biometric authentication and tokenization, reducing the risk of fraud and theft. However, there are challenges to consider.
Limited acceptance by some merchants can be a drawback and the reliance on technology means that any technical issues can disrupt the ability to make payments. Security concerns, while mitigated by advanced features, still exist and require users to remain vigilant.
The future of digital and mobile wallets
The future of digital and mobile wallets is bright, with increasing adoption and acceptance by both merchants and consumers. The rise of contactless payments, facilitated by services like Apple Pay, Google Pay and Samsung Pay, has made it easier than ever to make payments using mobile devices.
The growth of online shopping has also driven the popularity of digital wallets, as they offer a seamless and secure payment experience.
Nuvei's digital and alternative payment acceptance solutions
At Nuvei, we provide businesses with solutions that support both eWallet and mobile wallet payments, enabling them to meet their customers' preferences.
Our platform offers access to over 700 local and global payment methods, helping businesses reduce cart abandonment, streamline payment processes, and tap into new markets.
Whether online or in-store, Nuvei's platform ensures that businesses can accept payments through cutting-edge technologies, enhancing the customer experience and driving new revenue streams.
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