Mobile Wallets: Definition, Types, and Benefits

Mobile wallets

With contactless payments and tap-to-pay becoming more popular in a post-pandemic world, accepting mobile wallet payments has gone from a bonus payment option to an essential. 

A consumer desire for convenience and speed is fueling preferences for mobile wallet payments. And right now, 30% of mobile wallet users say they’d like to pay with their smartphone all the time.

Statista blue bar chart graph of when consumers want to use purchase a POS system and hardware that accepts mobile payments</p>
<p>As trust for mobile wallet security increases and customers want more convenient <a href=payment options, there’s no better time to learn what a mobile wallet is, how it works, and what you need to accept mobile wallet payments. 

What is a mobile wallet?

A mobile wallet is a digital wallet that holds credit, debit, ID, gift, membership, and rewards cards on a mobile device. 

Mobile wallets let consumers make payments using their mobile device, smart watches, or tablet instead of using a physical card. 

Benefits of mobile wallets

  • Security
  • Convenience
  • Speed

The use of mobile wallets is on the rise. In the US, per-user proximity mobile spending will nearly double to reach $7,827 in 2026, as customers shift toward mobile wallets and away from other payment methods.

Let’s look at the benefits driving this growth and popularity. 


Mobile wallet payments are considered secure. In fact, 64% of mobile wallet users in the UK prefer to use their mobile phone to pay because it has more built-in security features.

Mobile wallets use tokenization, so that when payment details are sent over near–field communication (NFC) waves it’s encrypted in the form of a token. That means payments are made without exposing sensitive account data.

Mobile wallets also require a passcode, face, or fingerprint scan before making a payment. 

That makes them potentially safer than carrying credit cards or cash that anyone can use following theft. 

Plus, if smartphones are lost or stolen, Apple, Google, and Samsung let users delete data remotely. 


PWC research shows that nearly 80% of US consumers consider speed and convenience to be among the most important elements of a positive customer experience. And 43% of customers would pay more for greater convenience too. 

Shoppers will nearly always choose the most convenient and simplest option.

And right now, 61% of consumers feel confident enough with contactless payments to leave their wallets at home and just take their phone—that figure rises to 77% for Generation Z.

Using a mobile wallet removes the inconvenience of carrying around a bulky wallet with multiple cards. Consumers don’t need to worry about losing or misplacing a payment card either. To make a payment they simply need to hover their device over an NFC-enabled reader. 

Luke Lee, the CEO, and founder of Pala Leather, says accepting mobile wallet payments is more convenient for both consumers and retailers. 

It is not only convenient for them, but it is also convenient for us. Accounting is much easier to do and transferring money is seamless. The method also helps streamline the checkout process, reducing wait times, and increasing customer satisfaction.

Luke Lee, CEO and founder of Pala Leather


Mobile wallet transactions are quicker than other traditional payment methods. Customers don’t need to wait for someone to find their change or process their debit card. Shoppers don’t need to shuffle through their wallets to find the right loyalty card either. 

Unlike EMV card payments where customers need to insert their card, enter a PIN, and wait, mobile wallet payments are usually quick and complete in a matter of seconds. 

In fact, contactless payments are 63% faster than cash payments and 53% faster than using a traditional card.

Alexa Allamano, Shopify merchant and owner of jewelry store Foamy Wader, agrees that speed is a big benefit of mobile wallets. 

Mobile wallet checkout is lightning fast and sidesteps the often awkward card handling process as customers navigate the payment process on a device they already trust. It’s only a matter of a few seconds, but the speed of mobile wallet payments is remarkable compared to credit card swiping and chip dipping.

Alexa Allamano, owner of Foamy Wader

Lee adds that many of Pala Leather’s customers expect mobile wallets as a standard payment option.

We’re seeing that nearing half of our customers either ask to pay through their card or their mobile wallets. People have become so used to online transactions that they also expect the same service and speed in physical stores.

Luke Lee, Pala Leather

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Digital wallet vs. mobile wallet

Digital wallet is a universal term for software that lets you store loyalty and payment card details in the cloud and then access them from a device like a smartphone, tablet, or laptop. 

Digital wallets have several use cases: 

  • Storing preferred payment details for online purchases
  • Transferring funds between accounts
  • Making payments through a mobile wallet

A mobile wallet is a type of digital wallet that’s available through an app on a smartphone device (either a mobile or a wearable like a watch). 

Customers can use mobile wallets to tap to pay when they’re making payments at physical stores. People can also add other non-payment items like boarding passes and event tickets. 

How does a mobile wallet work?

  • Near-field communication
  • Point-of-sale system
  • Tokenization

Mobile wallets work by using contactless near field communication that lets your smartphone finish transactions through nearby smartphone finish transactions through nearby point of sale terminals.

Near-field communication

Near-field communication lets two devices exchange information if they’re in close range. Devices usually need to be placed within four centimeters (1.5 inches) of one another to enable connection.

NFC allows you to share small payloads of data between two NFC-enabled devices. People simply need to wave a smartphone or wearable over an NFC-enabled device to send information without needing to touch the devices together. 

Apple Pay, Google Pay, and Samsung Pay all use NFC technology to complete transactions. 

Point-of-sale system

To pay with a mobile wallet, retailers will need to purchase a POS system and hardware that accepts mobile payments

With the right POS software, you can accept payments from mobile wallets, track your inventory, update loyalty programs, and potentially use your customer’s data in future marketing initiatives.

Shopify’s POS system accepts purchase mobile payments so customers can choose between paying with traditional chip-and-PIN methods or through tap-to-pay purchase.

💡 PRO TIP: Skip the manual entries and reconciling for online and in-store purchases with Shopify’s integrated payment processing. Accept credit, debit, and mobile wallet payments and track online and in-store sales and payments from Shopify admin.


Mobile wallets use tokenization to protect sensitive data from theft or manipulation. The process replaces valuable data with a temporary value generated as a series of numbers called a token. 

Apple Pay, Android Pay, Google Pay, and Samsung Pay all use tokenization to safeguard transactions. Once card details are uploaded, the mobile wallet provider sends the data to your card’s network, which replaces the card data with a token. Your mobile wallet then receives this token to make payments. 

If a cyber criminal gets hold of tokenized data, it doesn’t matter, as they can’t use it to make any kind of purchase. In the event of mobile loss or theft, your card provider would simply issue a new token. 

Types of mobile wallets

There are three types of mobile wallets:

  • Open wallet 
  • Semi-closed wallet
  • Closed wallet

Open wallet

Banks issue open wallets to the end user or a third party. Open wallets let users transfer funds or withdraw money remitted to their account in cash at ATMs. 

Some open wallet examples are: 

  • PayPal
  • Zelle
  • Venmo 

Semi-closed wallet

Semi-closed wallets let users receive money into their bank accounts but don’t allow cash withdrawal. Users can transfer funds to other users of the same payment portal. 

Some examples of semi-closed wallets are: 

  • Stripe
  • Square
  • PayTM

Closed wallet

Private companies or merchants issue closed wallets to customers for direct purchase from the issuing company. You can’t transfer funds from these accounts to a bank account or withdraw cash from it. You can only use money in closed wallets for services or goods provided by the issuing company. 

Closed wallet examples include: 

  • Amazon Pay 
  • Qla Pay

Examples of mobile wallets

  • Apple Pay
  • Google Pay
  • Venmo

The use of mobile payment apps like Apple Pay and Google Pay is expected to double between 2020 and 2025.To provide the best customer experience possible, your retail business needs to accept several types of popular mobile wallets. 

Some examples of mobile wallets include:

Apple Pay

When asked about which mobile payment brands US consumers had used in 2022, 56% said they had used Apple Pay:

Statista blue bar chart graph of mobile payment brands US consumers used in 2022

Consumers can use Apple Pay to complete transactions anywhere that accepts contactless payments. Users need to first download the Apple Wallet app to set up Apple Pay on an iPhone or iPad. Next, people need to use their device’s camera to capture the details from credit, debit, or store cards. Banks usually need to verify these details before users can start making payments. 

Google Pay

Google Pay is a mobile wallet that lets consumers make in-app, online, and in-person contactless purchases on Android devices. 

Created by Google to make app purchases in the Google Play store easier, it’s now becoming a popular payment method for in-store and online purchases globally. In fact, 41% of the US’s in-store POS purchases were done with Google Pay in 2021. 

To use Google Pay, customers need to connect a payment card or bank account to their Google Pay account. Then they can use their mobile as a payment method anywhere that accepts contactless payment. 


Launched in 2009, Venmo is a popular mobile wallet that lets users send and receive money. Often used between family and friends, users “Venmo” each other to split bills, pay for goods, tip restaurants, or even buy cryptocurrency. 

Retail businesses can also use Venmo to take payments for goods both online and in physical stores. 

To use Venmo, retailers need to add some personal details and link a bank account or debit card. It’s easy to send Venmo payments by searching for users by name, email, or personal QR code. Customers simply choose the recipient, add the correct amount, and send the payment. 

How to accept mobile wallet payments

It’s becoming increasingly important for retailers to accept contactless and mobile payments. Around 47% of consumers say they won’t shop at a store that doesn’t offer contactless payment.

As a result, in 2022, 53% of merchants plan to expand their mobile payment options.

Want to give your customers more convenient payment options? Here’s how to accept mobile wallet payments successfully. 

Get the right POS

All you need to start accepting mobile wallets as a payment method is a point-of-sale system that has the right technology to process these payments.

The best POS system enables you to accept multiple payment methods like mobile wallets or NFC cards. Many POS systems come with this technology built in so it may be a case of simply activating it. 

Look for POS systems that have features to track key sales data, create detailed reports, and manage your inventory. Shopify’s POS system lets you process purchase a POS system and hardware that accepts mobile payments so you can provide more payment options to customers, streamline the checkout process, and reduce wait times. 

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Advertise you accept mobile wallets

Once you’re set up to accept purchase a POS system mobile payments in-store, let customers know they can pay with their mobile wallets. In your physical stores, add some signage at the payment terminal that explains which mobile wallet types you accept. 

When customers are ready to pay, ask if they’re interested in paying with a mobile wallet. To attract spontaneous shoppers who may be passing your store on foot, add some signage to your window display. 

A simple contactless logo along with the names of the mobile wallets is enough to let customers know. 

Start accepting mobile wallets at your store

As mobile wallets continue to grow in popularity, carrying around a bulky wallet may no longer be necessary.

Given mobile wallets are simple, intuitive, and secure for smartphone users, it makes sense to explore how you can use the tech in your retail business. All you need is the right POS system and you can start accepting mobile payments from customers.

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Mobile wallet FAQ

How do you use a mobile wallet?

  • Download a mobile wallet app from your phone's app store.
  • Create an account and add your credit or debit card information.
  • Use the app to make payments. This can be done in stores or online.
  • Check your balance, add funds, and manage your account settings on the app.
  • When paying in stores, scan the QR code or tap your phone against the payment terminal.
  • Confirm the payment and you're done!

What is mobile wallet example?

Mobile wallet examples include Apple Pay, Google Pay, Samsung Pay, and PayPal.

What is considered a mobile wallet?

A mobile wallet is a virtual wallet that allows users to store, send, and receive digital currency from their mobile device. It is typically used for making purchases and sending money to friends and family, as well as for securely storing cryptocurrency. Popular mobile wallets include Apple Pay, Google Pay, and Samsung Pay.

What are 3 types of mobile wallets?

  • Apple Pay
  • Google Pay
  • Samsung Pay