What Is a Digital Payment and Digital Wallet?

A digital payment or digital wallet is an electronic payment system that stores a user's credit card information in an app or online service, like Apple Pay or Google Pay. It also allows users to save boarding passes, tickets, and other documents for easier access when needed.  The top digital wallets include Apple Pay, Google Pay, and Samsung Pay. These apps can be downloaded to a mobile device and then used by retailers that support them.    

Compared to traditional debit and credit cards, digital payments are faster and more convenient. They're also safer because they use a process called tokenization to mask a consumer's card number. This method ensures that a merchant never sees the customer's actual card details, which can make it harder for hackers to steal personal information.  

Many digital wallets also allow you to add gift cards and loyalty programs from different companies to your account. For example, Starbucks offers an app that lets customers reload their Starbucks gift cards with a credit or debit card.    

The most popular digital wallets use a process called tokenization, which generates an encrypted version of your credit or debit card that is not stored on the app. This means that if you lose your phone or it gets stolen, the information isn't easily accessible. These apps often require you to authenticate yourself with a fingerprint sensor, pin number or iris scanner before you can use them. Some also use a QR code, which is similar to a barcode you scan with your phone's camera to make purchases.