The Advent of the Digital Wallet

  • Crypto Guru
    June 24, 2021, 18:29

Perhaps one of the more unexpected consequences of the global pandemic has been the revolution in the way we pay for the goods and services we consume. Whether online or in-store, we have seen an accelerated transition towards digital payments.

Just as physical wallets have been around as long as paper money itself, the digital world required its own answer to the storage of currency. Enter the digital wallet. A digital wallet provides a means of storing and managing payment methods and can exist across various platforms. Learn more below.

From PayPal to SuperApps

The concept of the digital wallet is, in tech terms, not a particularly new one. In fact, PayPal brought the first digital wallet to market back in the 90s, allowing users to store their credit card details within the PayPal ecosystem, and make payments on various web services without the need to re-input their credit card details every time. Since then, hundreds of companies have sprung up offering similar solutions, including household names such as Amazon, AliPay, and Shopify. As a result, users could rely on a trusted multinational to make payments to companies they had perhaps never heard of before, increasing the level of security they enjoyed.

With the birth of the smartphone, the digital wallet concept took on a whole new significance. Now, with practically everyone carrying an NFC-ready device in their pocket, providers such as Google and Apple were quick to launch their own digital wallets, allowing users to make payments both in-store and online, directly from their smartphones. Given that modern smartphones are equipped with the latest biometric security protocols, users were now able to make payments while eliminating the risk of card cloning or theft, factors that blight traditional payment methods. In Europe and North America, mobile payments are accepted almost universally. In Asia, specifically China, platforms such as Ali Pay or WeChat Pay dominate, relying on QR code technology instead of NFC signals.

Many digital wallets can store money in their own right and provide a means to spend, transfer and manage cryptocurrencies. SuperApps, such as Britain’s Revolut or Russia’s Tinkoff, are taking things a step further, with wallet/banking hybrid apps promising a fintech future, bundling social, financial, and lifestyle into a single application.

Digital Wallets and Unbanked Consumers

Above, we have discussed the application of digital wallets in developed nations where almost everyone has a bank account to couple with the technology. However, digital wallets also serve a vital role in less developed nations, where not everyone has access to traditional banking.

M-Pesa in Kenya teamed up with a leading mobile provider Safaricom in cooperation with Vodafone, to offer digital payments in a country where mobile phones are mainstream, but bank accounts are not. SMS utilizing USSD technology is used to make payments on M-Pesa. Similar developments were seen in Indonesia, where the ride-hailing app GoJek branched out into digital payments.


The pandemic has accelerated what appears to be a natural progression, both in developed and developing markets: digital wallets are revolutionizing the way we use money and are becoming the mainstay of today’s payment infrastructure. In addition, the development of new payment methods such as buy now, pay later, account-to-account payments, as well as cryptocurrencies and central bank digital currencies, create a requirement for a common platform. A digital wallet is a great option for that.