Mobile Wallet

A virtual wallet that stores information from a credit card, a debit card, coupons, and loyalty cards on a mobile device

What is a Mobile Wallet?

A mobile wallet is a type of virtual wallet that stores credit card numbers, debit card numbers, and loyalty card numbers. It is accessible through an app installed on a mobile device, such as a smartphone or tablet.

Mobile Wallet

Customers use mobile wallets to make in-store payments, and it is a convenient payment method compared to paying with cash or carrying physical credit cards. Mobile wallets are accepted as a method of payment in stores that are listed with mobile service providers.

The most popular mobile wallets include Google Pay, Apple Pay, and Samsung Pay. The wallets are integrated into mobile devices, or users can download the application from app stores.


  • A mobile wallet is a virtual wallet that stores information from a credit card, a debit card, coupons, and loyalty cards on a mobile device.
  • Mobile wallets allow users to make in-store payments without having to carry cash or physical credit cards.
  • The most popular mobile wallets include Google Pay, Apple Pay, Samsung Pay, and PayPal.

Understanding Mobile Wallets

The information stored in a mobile wallet is encrypted, making it difficult for cybercriminals to execute fraudulent activities with them. While physical credit and debit cards can be stolen or duplicated, mobile wallets are difficult to steal since they come with encrypted keys that may not reveal any useful information.

Once a customer installs a mobile wallet on their mobile device, they are required to provide their credit card details, reward cards, and coupons. The information is then linked to an accepted personal identification format, such as a key or a scannable QR code.

When a customer makes an in-store payment, the mobile app uses near-field communication (NFC) technology to communicate between devices. The NFC uses a QR code, key, or another personal identification format to process the payment at the payment terminal. The action is triggered when the user taps or waves the NPC-enabled device at the merchant’s point-of-service terminal.

Types of Mobile Wallets

The following are the main types of mobile wallets:

1. Open wallets

An open wallet is used directly by a bank or through a third party. Open wallets allow customers to use the funds in the mobile wallet for making payments for transactions or withdrawing the funds deposited to the account in cash. An example of an open mobile wallet is PayPal, which allows users to make payments for in-store and online purchases and still withdraw the funds in cash.

2. Closed wallets

Closed wallets are linked to specific merchants, and users can only use the funds to make payments for transactions initiated with the specific merchant. Users cannot use the money to make payments for transactions with other merchants and third-party service providers or withdraw the funds in cash. An example of a closed wallet is Amazon Pay.

3. Semi-closed wallets

Semi-closed mobile wallets allow users to use the funds in the wallet to make payments for transactions with multiple merchants, as long as there is an existing contract between the merchant and the mobile wallet company. Users can also withdraw the funds into a bank account. However, semi-closed wallets do not allow users to withdraw funds in cash.

How to Use a Mobile Wallet

After choosing your preferred mobile wallet, it is easy to set it up and use it to make payments. Start by downloading the mobile app in the app store onto your smartphone, tablet, or other compatible devices. Then, launch the app, and start adding the information you want to add to your wallet – credit cards, debit cards, coupons, reward cards, etc.

While it is possible to load information for multiple cards onto the wallets, only one card will be selected as the default payment option to be used to make payments. If a user wants to use a different card to make the transaction, they must change the default card before making the payment.

When making an in-store purchase, find merchants that accept your chosen payment gateway. Usually, merchants that accept mobile wallet payments can be identified through a contactless payment indicator (usually a sideways Wi-Fi symbol).

When making a payment, users are required to tap or wave their device to the NFC-enabled terminal. After making the payment, a message is sent to the merchant regarding the payment. The merchant must honor the message alert for the payment to be transferred from the consumer’s account to the merchant’s account.

How to Use a Mobile Wallet

Benefits of Mobile Wallets

1. Secured access

One of the benefits of a mobile wallet is its secured access. Before making a payment, the user is required to unlock the mobile device using a password or fingerprint. The app also requires users to type a passcode, use their fingerprint, or use a face scan to unlock the mobile wallet.

In the case of theft, it will be impossible for anyone to use the mobile device to make a payment without providing the required security credentials. It makes mobile wallets more secure than carrying physical credit cards and cash, which can easily be compromised.

2. Accessible and convenient

Mobile wallets are also quickly accessible and convenient, making it easier for users to make payments. They are preferred by consumers who want more convenience in paying for in-store purchases, instead of carrying physical wallets and cash to stores. Once credit card information is added to the mobile wallet, users can use the funds to pay bills and make purchases on the go.

Additional Resources

CFI is the official provider of the global Financial Modeling & Valuation Analyst (FMVA®) certification program, designed to help anyone become a world-class financial analyst. To keep advancing your career, the additional resources below will be useful:

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