# Mobile Wallet: What It Is, How It Works, and More

## What Is a Mobile Wallet?

A mobile wallet stores credit or debit card information on a mobile device, such as a [smartphone](https://www.investopedia.com/terms/s/smartphone.asp), tablet, or smartwatch. Mobile wallets are a convenient way for you to buy things online or in stores that are set up to take payments through the wallet. They may also be more secure than physical payment cards because of the technology they use to protect your account information.

### Key Takeaways

*   Mobile wallets are apps for storing financial information and other documents such as credit cards, bank information, and driver’s licenses.
*   Many smartphones come loaded with mobile wallets, but there are also other mobile wallet apps you can download.
*   Mobile wallets use near-field communication technology, which requires you to be near a payment terminal at the cash register when paying for something in person.
*   Mobile wallets use many layers of encryption and security to ensure that transactions are safe.  
    

## Understanding Mobile Wallets

A mobile wallet is either a built-in feature or an app that can be installed onto smartphones. A mobile wallet stores [credit card](https://www.investopedia.com/terms/c/creditcard.asp), debit card, coupon, or reward card information and can connect directly to bank accounts.

Three of the main mobile built-in wallets are Apple Wallet, Google Wallet, and Samsung Wallet. These apps store your payment card information but can also hold other documents such as event tickets, vaccination records, or airline boarding passes. They are integrated with their respective payment services (Apple Pay, Google Pay, and Samsung Wallet), which are used to make payments. You as a user may not even notice the difference between, say, Apple Wallet and Apple Pay.

Take note that [peer-to-peer (P2P)](https://www.investopedia.com/terms/p/peertopeer-p2p-service.asp) payments via Google Pay are no longer available for U.S. users, although they may be available in certain other countries.

When you use it to make a purchase or payment, the payment app uses a technology called [near-field communication (NFC)](https://www.investopedia.com/terms/n/near-field-communication-nfc.asp), which uses radio frequencies to communicate between devices. NFC uses the personal identification format created for the user to communicate the payment information to the merchant’s [point-of-service (POS)](https://www.investopedia.com/terms/p/point-of-sale.asp) terminal. The information transfer is usually triggered when the user waves or holds an NFC-enabled mobile device over the store’s NFC reader.

Let’s say you add your debit card to Apple Pay and want to use it at McDonald’s. You would hold your phone next to the card reader, which uses NFC technology to communicate with your phone. Apple Pay opens using a verification method such as face recognition or a passcode and asks you to click a button to confirm payment through the default payment method stored with the app. (You could also tap the app to use a different card you’ve stored in the app.) The payment information is sent through NFC technology.

> **Important**
>
> The terms “mobile wallet” and “mobile payments” are often used interchangeably, but there are slight differences between them.

## Special Considerations

Some of the most common concerns about mobile wallets include how card information is handled and whether they are secure. Your [debit card](https://www.investopedia.com/terms/d/debitcard.asp) information is never stored on the device. Instead, when you sign up for the service, the card information is encrypted and stored on a secure chip. When you make a purchase, Apple uses a token—a unique, randomly generated number that can be mapped to your original data. If a thief should get hold of the token, it would be useless to them.

## Types of Mobile Wallet Apps

Most smartphones and mobile devices are equipped with NFC technology. iPhones have Apple Wallet and Apple Pay, Android phones are often equipped with Google Wallet, and Samsung Galaxy phones are preloaded with their proprietary Samsung Wallet, which includes Samsung Pay. Besides what comes preloaded on smartphones, mobile wallets from other companies have also become very popular.

Some apps developed by third parties include:

*   **PayPal**: The online payment platform is available for download on both iOS and Android devices. Fees vary for PayPal—check to see if your payment method has fees attached.
*   **Google Pay**: Google Pay comes loaded on many Android phones, but it’s also available for download on Apple (iOS) phones. Google Pay no longer supports P2P payments for U.S. users, however.
*   **Venmo**: Venmo started as a P2P app but is slowly making a foothold with retailers as well. Venmo does charge a 3% fee for any purchases made with a credit card linked to the platform. Transactions that draw from a bank account are free.

## Benefits of Mobile Wallets

Fraudulent activities, such as identity theft, are harder to initiate with mobile wallets. Though a user’s credit card can easily be stolen or duplicated, smartphones are not so easy to steal. A smartphone that is stolen may be hard to access if there is an access password, fingerprint check, or facial recognition installed.

As discussed above, mobile wallets don’t store your card information on the phone, and they use encryption and tokenization for secure transactions.

Using a mobile wallet can be faster than using a chip card for a payment. And because mobile wallets are a digitized version of physical wallets, almost every valuable card stored in a physical wallet can also be stored in a mobile wallet, such as a driver’s license, [Social Security](https://www.investopedia.com/terms/s/socialsecurity.asp) card, health insurance cards, loyalty cards, hotel key cards, and bus or train tickets.

## Digital Wallets vs. Mobile Wallets and Payments

[Digital wallet](https://www.investopedia.com/terms/d/digital-wallet.asp) is another term used interchangeably with mobile wallet or mobile payments. However, they are implemented differently even though they both store payment information. Digital wallets are mostly used for online transactions and may not necessarily be used on mobile devices.

Mobile wallets are used by people who would rather not carry a physical wallet when making in-store purchases. For this reason, these wallets have to be used on mobile and easy-to-carry platforms.

Apple Pay, Samsung Pay, and Google Pay are examples of mobile payments that can be installed on a handheld or [wearable device](https://www.investopedia.com/terms/w/wearable-technology.asp). A regular PayPal account is a form of a digital wallet, but when used in conjunction with mobile payment services and mobile devices, it functions as a mobile wallet.

## Is a Digital Wallet the Same as a Mobile Wallet?

Though digital wallets and mobile wallets are very similar, they aren’t the same. Digital wallets are typically meant for online transactions, whereas mobile wallets are tied to a smartphone or wearable device. Both connect to bank accounts and credit cards for purchasing on the go.

## Can I Use Apple Pay on an Android Phone?

Most smartphone makers use proprietary mobile wallets on their phones. Only iOS devices may use Apple Pay, just as only Samsung phones can use Samsung Pay. For universal use, download a third-party mobile wallet like PayPal or Venmo.

## Can I Use My Mobile Wallet on My Smartwatch?

Many tech wearables are now capable of using mobile wallets. Depending on the device, it may come preloaded with a mobile wallet, such as Apple Pay on an Apple Watch.

## What Are Some Emerging Trends with Mobile Wallets?

Emerging trends for the more than 5.2 billion mobile wallet users expected worldwide by 2026 include:

*   Mobile wallets using [QR codes](https://www.investopedia.com/terms/q/quick-response-qr-code.asp) for P2P and merchant payments
*   Mobile wallets using app-to-app (A2A) integrations to handle payments without a terminal
*   Mobile wallet apps offering features such as bill payments, microloans, and savings products

## The Bottom Line

Mobile wallets allow people to use their phones to pay for everyday services. With complex encryption and security features, using a mobile wallet can actually be safer than using a physical card. Most phones now come preloaded with the company’s mobile wallet app, but there are options, such as Venmo, that work with all phone brands.  

> **Article Sources**
>
> 1.  Google Help. “[Changes to the Google Pay App in the U.S.](https://support.google.com/googlepay/answer/14555219?hl=en)”
>     
> 2.  Apple Support. “[Make Purchases Using Apple Pay](https://support.apple.com/en-us/HT201239).”
>     
> 3.  Apple Support. “[Apple Pay Security and Privacy Overview](https://support.apple.com/en-us/HT203027).”
>     
> 4.  Venmo. “[The Legal Stuff](https://venmo.com/resources/our-fees/).”
>     
> 5.  Apple Support. “[Devices Compatible with Apple Pay](https://support.apple.com/en-us/HT208531).”
>     
> 6.  Samsung. “[Samsung Pay Supported Devices](https://www.samsung.com/my/samsung-pay/supported-devices/).”
>     
> 7.  Business Information Industry Association. “[Beyond Cards: The Rise of Mobile Wallets](https://www.biia.com/beyond-cards-the-rise-of-mobile-wallets/).”