Digital Wallet
An app or service that stores a customer's payment credentials so they can pay online or in person without entering card details each time.
Definition
A digital wallet stores a customer's payment credentials, usually tokenized versions of their cards or bank accounts, inside an app or device so they can pay without typing card details. Wallets built into phones let clients approve a payment with a fingerprint or face scan, and the same credentials work across websites and checkout pages that support them.
Under the hood, wallets are tokenization plus convenience. The wallet never shares the real card number with the business; it passes a device-specific token along with a cryptographic signature confirming the customer authenticated. From your side as the one getting paid, a wallet payment arrives through your normal payment processor and settles like any other card transaction, at similar fee rates.
Why It Matters
Offering wallet payments removes the single biggest point of friction on a payment page: typing a card number, especially on a phone. When a client opens your invoice on their phone and can pay with a thumbprint in five seconds, invoices simply get paid faster. Checkout abandonment drops noticeably when wallets are available.
Wallet payments are also more secure than keyed-in cards. Because they use tokenized credentials and built-in customer authentication, they carry lower fraud rates, which means fewer disputes and chargebacks landing on you. There is rarely a downside: most invoicing and payment platforms let you switch wallets on with a checkbox.
Examples
- 1
A freelancer enables wallet payments on her invoices; a client pays a $950 invoice from his phone in seconds during a train ride instead of waiting until he is back at a desk.
- 2
An agency notices invoices with wallet options get paid 3 days faster on average than card-only invoices.
- 3
A client pays a $2,400 invoice through a phone wallet; the agency receives a tokenized card payment with the same 2.9% fee as a normal card.
Related Terms
Quick Navigation
Ready to put this into practice?
InvoiceLaunch automates invoicing with built-in payment terms, late fees, and more.
Get Started