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As the world is becoming increasingly cashless and mobile-centric, building a digital wallet can be a lucrative business choice. By providing seamless transaction experiences for users, e-wallets unlock new revenue opportunities for businesses.

What is a digital wallet, and how does it work? What can a digital wallet be used for? What are the types of digital wallets? How do I use a digital wallet to generate revenue? Read on to find the answers.

What Is a Digital Wallet?

A digital wallet, or e-wallet, is an electronic service that enables storing, sending, and receiving money electronically. Digital wallets exist in three forms: a smartphone application, a web service, or a physical device as a PoS terminal. Digital wallets work using encrypted connections, ensuring the security and confidentiality of financial transactions.

In other words, digital wallets are electronic tools for managing finances. They let you store financial assets digitally, providing convenient access to funds and allowing you to make purchases online or in the real world using your smartphone or other devices.

In addition, businesses can use digital wallets to manage loyalty programs, enabling their customers to easily track and use loyalty points or rewards.

A digital wallet is an excellent choice for businesses looking to quickly set up operations and start implementing a system of wallets, balances, points, etc., instead of reinventing the wheel and taking on a lengthy commitment.

Moreover, a digital wallet is much easier to launch from a legal point of view. Regulators in many countries have less demanding requirements for digital wallets than for full-fledged banks or financial institutions.

With a digital wallet, the average transaction cost for business is around $0.009 since it removes the need for intermediaries on the way from user to user or from user to business.

While the e-wallet technology provides the same functions as an ABS (automated banking system), it costs less to implement and is easier to scale.

How Does a Digital Wallet Work?

An e-wallet is an app you can use on a computer, a smartphone, or a wearable device like a smartwatch. Different digital wallets employ different technologies to enable transactions:

NFC (Near Field Communication)

NFC allows two devices to exchange data when they're close to one other, like Apple Pay and Google Pay wallets. A merchant will have compatible card readers at checkout to accept NFC-powered payments.

MST (Magnetic Secure Transmission)

The MST technology is based on generating a magnetic signal sent to a card reader, similar to one you trigger by swiping the magnetic stripe on a physical card. For example, Samsung Pay utilizes MST along with the NFC technology.

QR codes (quick-response codes)

QR codes are two-dimensional matrix barcodes that users can scan with a smartphone's camera. For example, we implement QR codes as the most convenient way to pay for coffee or taxi if you’ve suddenly run out of cash. This feature allows users to quickly generate a QR code to make a payment.

Features of Digital Wallet

As a business offering a digital wallet to your customers, you should clearly define the features and functions of your wallet. Of course, you'll run conceptualization sessions with your team members and tech team, but here's a list of the core features of digital wallet to help you make a more informed choice:

  • P2P transfers: Let your users send money to friends and family in seconds.
  • QR code payments: Add a QR code feature to provide your customers with an extra payment option.
  • Transaction history: Include a transaction history feature to let users effortlessly keep track of their spending.
  • Bill splitting: Include the bill splitting feature to simplify group payments.
  • Multi-platform access: Allow customers to access your digital wallet through their smartphones, tablets, or desktops.
  • Loyalty card integration: You can build an e-wallet that enables storing loyalty and rewards cards in one place, making them accessible with a tap.
  • Online payments: Ensure secure online payments without manually entering credit card details each time.
  • Contactless payments: Let your users make payments at the speed of life — just tap, pay, and go.
  • Card issuing and acquiring: This feature enables issuing physical and virtual cards, allowing for tokenization, transactions, account freezes, etc.
  • Digital receipts: With this feature, app users can keep their receipts organized and clutter-free.

Types of Digital Wallets

Based on their level of acceptance and usability, digital wallets come in three types: closed, semi-closed, and open.

Closed digital wallets

Closed digital wallets are typically issued by a specific company for use within its ecosystem, meaning users can make purchases only from the issuer of the wallet. For example, a closed wallet issued by a specific retailer can only be used to buy items from that retailer's stores or website.

Semi-closed digital wallets

While semi-closed e-wallets are more versatile than closed wallets, they still have some restrictions. Such a wallet is typically issued by a third party and can be used for transactions within a predefined vendor network. In other words, you can only purchase from merchants or service providers within the wallet's restricted network.

Open digital wallets

Open digital wallets are the most versatile and widely accepted type of digital wallet. Because they aren't tied to any specific company or vendor network, users can use open e-wallets to make purchases at a broad range of merchants, both online and in physical stores.

Benefits of Digital Wallets

While launching an e-wallet is associated with some challenges, such as ensuring regulatory compliance, dealing with certifications, and integrating third-party services, it can provide a number of benefits:

  • Monetization of the customer base: You can set commissions or fees for using the wallet, generating additional income.
  • Enhanced customer experience: Digital wallets provide a convenient payment experience for customers, resulting in greater customer satisfaction and loyalty.
  • Increased ARPU (average revenue per user): Due to the convenience of use, e-wallet users are likely to make more transactions, increasing your APRU. In addition, digital wallets can encourage impulse buying, translating to higher transaction volumes and revenue.
  • Data insights: You can gather valuable customer data through digital wallet transactions, allowing for better customer segmentation and targeted marketing.
  • Cross-selling and bundling: Integrating a wallet with your other products/services can encourage customers to return for more by offering special promotions or discounts.
  • Strategic advantage: A modern solution such as an e-wallet positions your business as innovative and future-oriented.
  • Global reach: Digital wallet users can make transactions from anywhere globally, providing unlimited opportunities for expanding your audience.

How To Use a Digital Wallet

It's high time to answer the question: how do I use my digital wallet to make revenue? Here's how:

  • Transaction fees: You can set transaction fees or offer other paid services to generate income for your business.
  • New growth opportunities: A SuperApp can be easily integrated into the most popular services used by your audience, creating a seamless ecosystem for enhanced user engagement and profitability.
  • Increased customer loyalty: Integrating loyalty programs, bonuses, and coupons into an e-wallet helps keep customers coming back and buying more.

Difference Between Digital Wallets and Crypto Wallets

While sharing some similarities, digital and crypto wallets serve distinct purposes and cater to different needs. Let's explore the fundamental differences between the two:

  • Supported assets: Digital wallets can be used for managing a wide range of digital assets, including traditional currencies, loyalty cards, tickets, and more. On the other hand, crypto wallets are designed exclusively for storing and managing cryptocurrencies like Bitcoin, Ethereum, etc.
  • Transaction type: While digital wallets are centralized and usually provided by financial institutions, payment service providers, or tech companies, crypto wallets operate on decentralized blockchain networks, meaning transactions are verified by a network of nodes, not a central authority.
  • Privacy: Crypto wallets provide a degree of privacy and pseudonymity. While transactions are recorded on the blockchain, user identities are not necessarily tied to wallet addresses. In contrast, digital wallets require the disclosure of personal information.
  • Regulation: Digital wallets are subject to financial regulations and government oversight, ensuring compliance with anti-money laundering (AML) and Know Your Customer (KYC) requirements, while crypto wallets are less regulated or subject to laws.


With digital transactions steadily replacing traditional ways of paying for goods and services, one thing is for sure: e-wallet development is a worthy investment.

From monetization opportunities to robust data analytics, building a digital wallet offers numerous benefits. And while it's also associated with security concerns, regulatory compliance, and interoperability, a reliable development team can help you navigate these challenges.

At Finamp, we provide professional e-wallet development services. Get in touch with us to schedule a call and discuss your idea.


What are digital wallets?

Digital wallets are software apps that store digital representations of payment or loyalty cards, allowing users to make transactions and manage their assets through a mobile device or computer.

How does a digital wallet work?

Here's how a digital wallet works: it stores digital versions of payment cards and uses technologies like NFC for contactless payments and QR codes and mobile apps to facilitate electronic transactions.

What is the digital wallet app?

It's a mobile application or software platform that enables users to securely store and manage payment cards, loyalty cards, tickets, and more.

How do I use a digital wallet?

So, how do you use a digital wallet? Businesses mainly use digital wallets to make money from transaction fees or encouraging purchases through loyalty and rewards programs.

How do I start a digital wallet?

Launching a digital wallet involves several steps:

  • conceptualization and planning
  • UI/UX design
  • Development and testing
  • Integrations
  • Marketing
  • compliance and security

Is e-wallet technology safe?

Yes, e-wallet technology is safe when implemented correctly. The critical considerations for ensuring the safety of e-wallets include encryption, multi-factor authentication, secure storage of user data, regular updates, and fraud detection mechanisms.

What are examples of digital wallets?

The most popular digital wallet options include Apple Pay, Google Pay, Samsung Pay, Venmo, PayPal, and Amazon Pay.

Does a digital wallet require a bank account?

Not all digital wallets require a bank account; it depends on the type of wallet and its functionalities. Many e-wallets, especially those designed for P2P payments, do not necessarily require a linked bank account. Users can fund these wallets by linking credit or debit cards or receiving funds from others.

How much does it cost to build a digital wallet?

The cost of building a digital wallet depends on several factors, such as the complexity of the wallet, its features, the development approach, and geographic location. You can find Finamp’s pricing policy in our brochure. In addition, you can always talk to our manager who will advise you on the best approach to develop your product.

Can I integrate your wallet into my infrastructure?

Yes, if they're technically compatible. Contact us to schedule a call, and we'll gladly answer your questions concerning e-wallet development and integration.