What Is a Digital Wallet, and How Does It Work?

A digital wallet is a fast, convenient way to make purchases and help you keep your money safer


Devices like smartphones, smartwatches, laptops and tablets have become a critical part of modern life. With just a few clicks or taps, you can take care of countless everyday tasks. And that includes making purchases without needing your physical credit card. How? Through the ease and added security features of a digital wallet.

Learn more about what digital wallets are, how they work and how they can help you keep your money safer.

What Is a Digital Wallet?

Digital wallets are exactly what they sound like. They’re electronic versions of your physical wallet. They can store things like credit card information, loyalty cards and even tickets you’ve purchased. 

You can access that personal data from devices like your smartphone, smartwatch, computer or tablet. This can help you declutter and avoid carrying a bunch of physical cards around with you. And it can make payments quick and easy. 

What’s the Difference Between Digital Wallets and Mobile Wallets? 

The terms “digital wallet” and “mobile wallet” are often used interchangeably. But they can also refer to slightly different things. 

Basically, “digital wallet” is an umbrella term that includes mobile wallets. 

A digital wallet is software that stores your payment information and can be installed on your desktop computer, laptop or mobile device. 

A mobile wallet is a type of digital wallet on a mobile device, like your smartphone or smartwatch. And you can use mobile wallets to make contactless, in-store purchases at a store’s physical checkout. 

And while “digital wallet” is a broad term, it might be used to refer to software that’s used primarily for online purchases rather than contactless, in-store checkout.

Think of it like this: A mobile wallet is a type of digital wallet, but not all digital wallets are mobile. 

Are There Different Types of Digital Wallets?

There are many different types of digital wallets. And most can hold several cards at once. Plus, many devices have built-in digital wallets that support some of your favorite digital payment platforms.

Here are a few examples of digital wallets and mobile payments:

  • Apple Pay®: An easy, secure and private way to pay with your Apple devices. 
  • Fitbit Pay™: Pay right from your watch or tracker. No phone or wallet needed.
  • Garmin Pay™: A simple way to pay with your smartwatch. 
  • Google Pay™: A safe, simple and helpful way to pay and manage your money. 
  • PayPal: Secure online checkout with all your card benefits.
  • Samsung Pay®: Check out securely in person or online with your Samsung device. 
  • Venmo: Send or receive money using what’s in your Venmo account or bank account.  
  • Zelle®: No cash? No problem. Zelle can help you send money securely to friends and family across the country. 

These are just some of the digital wallet and mobile payment options out there. And you might find that different ones suit your needs in different situations. 

How Do Digital Wallets Work?

Most digital wallets come with an app you can add to your computer, phone, watch or other smart device. 

When you’re out shopping, you can pay with most wallets by holding your device near a terminal that has the contactless symbol (four curved lines). 

To complete the transaction, you might be required to provide a passcode or authenticate through fingerprint or facial recognition. From there, you can use the app to make purchases, pay someone directly or even use tickets for things like concerts or travel.

For nonmobile digital wallets—think online shopping from a laptop—you might be prompted to log in or provide a password. And that can be much faster and easier than finding your physical card and then typing in several rows of information.

How Can You Use Your Digital Wallet?

One of the benefits of a digital wallet is the freedom of quick transactions. And that can come in handy—especially when you’re out and about and realize you left your physical wallet at home. 

Many retailers now have updated payment terminals that are compatible with contactless payments like mobile wallets and contactless cards.

Here are just a few ways you can use your digital wallet: 

  • Online: If you’re an avid online shopper, entering your card information every time you make a payment can get a bit tedious. Digital wallets can eliminate that process by automatically filling in your information for you. So checking out is just a few clicks away.
  • On the go: Simply pay with your mobile wallet on your smartphone, smartwatch or other mobile device when you’re checking out in store. 
  • In apps: Use your digital wallet for easy, secure in-app purchases. 
  • At ATMs: You might also be able to use your mobile wallet instead of a physical card at some ATMs. 

Are Digital Wallets Safe?

Now you know more about how digital wallets work and how to use them. Your next question might be: How safe are digital wallets? 

When you check out with a digital wallet, a unique 16-digit number, or token, is assigned to your card. But unlike your credit card number, a token is more secure because your card number isn’t seen by the merchant. And that token can only be used with a unique, encrypted code that gets applied to each individual transaction.

So when you shop with a digital wallet, you can check out knowing your full financial information is hidden from the merchant.

Lost or Stolen Devices

And what if your device is lost or stolen? Thankfully, there are apps available that allow you to remotely lock or erase your device’s data. Using these apps and setting up additional security, like fingerprint recognition and password protection, can help make your device more secure. 

And before you sell or recycle your device, it’s a good idea to back up your data and then delete your personal information to help prevent things like identity theft and credit card fraud.

Are There Other Safe, Convenient Ways to Shop? 

Digital wallets are just one way to make online or in-store shopping easy and secure. But things like virtual card numbers and contactless credit and debit cards can help, too.    

Virtual Card Numbers

Virtual card numbers allow you to shop online without giving vendors your actual card number. The virtual numbers are still linked to your credit card account, but they allow you to use a different number to fill out payment information when you shop online.

This means your actual credit card is never given to the websites where you shop—adding another layer of security. And if a merchant site is compromised, there’s no way your virtual card number can be used to make purchases elsewhere.

Capital One virtual card numbers are possible thanks to Eno, your Capital One assistant. Eno creates virtual card numbers right from any checkout page, so you can experience the same great credit card benefits without reaching for your wallet. And that’s just one of the many things Eno can do for you

Contactless Credit and Debit Cards

Contactless credit and debit cards work a lot like mobile wallets. The transaction is completed by simply holding or tapping the card on a contactless-enabled card reader. 

The tap-and-go process usually takes less than a second, making it way quicker than inserting or dipping a chip card—and way faster than using cash. 

Contactless transactions are just as secure as chip card transactions. Each contactless transaction creates a unique, one-time code or password. This reduces security risks since the code can’t be used again—and it can be read only by the card-processing network. 

Many of Capital One’s U.S.-issued credit cards and debit cards now feature contactless technology. This includes popular credit cards like Savor, SavorOne, Quicksilver, QuicksilverOne, Journey and Platinum, as well as 360 Checking debit cards. 

Keeping Your Money Safer

Curious to find out more ways to manage your money and keep it safer? You can explore Capital One’s credit card benefits and learn about even more of Capital One’s credit card security features that can help you keep your money safer and shop more conveniently. 


Learn more about Capital One’s response to COVID-19 and resources available to customers. For information about COVID-19, head over to the Centers for Disease Control and Prevention

Government and private relief efforts vary by location and may have changed since this article was published. Consult a financial adviser or the relevant government agencies and private lenders for the most current information.

We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.

Capital One does not provide, endorse, or guarantee any third-party product, service, information, or recommendation listed above. The third parties listed are solely responsible for their products and services, and all trademarks listed are the property of their respective owners.

Eno is learning all the time and may not catch everything. Eno may not catch all eligible charitable transactions and is not a tax advisor. Potential charitable donations identified by Eno may or may not qualify with the IRS. Eno service outages may occur. Capital One customers are responsible for regularly checking their account statements. Web access is needed to use mobile banking. Check with your service provider for details on specific fees and charges. Texting with Eno means you agree to chat about your account over SMS and receive recurring messages. Message and data rates may apply. Mobile phone carrier fees for text messages may apply.

Some or all Eno features may not be available to all Capital One customers, depending on the types of accounts held. For example, certain bank accounts are not eligible to text with Eno, and Eno email notifications, app notifications and virtual card numbers from Eno may not be available for certain credit cards.

The Eno browser extension for virtual card numbers is only available in certain web browsers, and enrollment is required. Virtual card numbers are not available for debit cards and some credit cards. 

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