Payments glossary · Methods
E-Wallet (Digital Wallet)
An e-wallet, or digital wallet, is an app or online account that stores payment credentials or a balance so customers can pay without entering card details. Examples include Apple Pay, Google Pay, PayPal and Alipay.
How E-Wallet works
Wallets fall into two broad types. Pass-through wallets, such as Apple Pay and Google Pay, store a tokenised version of the customer's card; the merchant still receives a card transaction, so card fees, rules and chargebacks apply, but with stronger security. Staged or stored-value wallets, such as PayPal or Alipay, hold a balance or fund the payment from a linked card or bank account behind the scenes; the merchant is paid by the wallet provider, under that provider's own fees and dispute rules.
Wallets that hold customer funds are usually regulated as e-money. The EU E-Money Directive (2009/110/EC) defines e-money as electronically stored monetary value, issued on receipt of funds and accepted as payment by parties other than the issuer, and issuers need an e-money licence. The UK has equivalent rules in the Electronic Money Regulations 2011.
For merchants, wallets reduce checkout friction, especially on mobile, and some are essential in particular markets, such as Alipay and WeChat Pay for Chinese customers or regional wallets in Southeast Asia and Latin America. When comparing providers, check which wallets are supported natively, whether pass-through wallets need extra set-up such as domain verification, how refunds work and what each stored-value wallet charges.