Digital Wallets: Pros and Cons for Merchants

Digital wallets are becoming mainstream, but there are benefits and drawbacks to consider. Read our guide to see if they’re right for your business.

Whether you accept digital wallets or not, chances are you’ve seen them in action. This alternative payment method (APM) has quickly gained popularity in recent years, though it isn’t a particularly new technology. 

Still, as a merchant, you’re responsible for choosing secure, affordable, and easy payment methods. With that in mind, it’s important to understand how digital wallets work and what benefits they can offer. Here’s what you need to know.


What Are Digital Wallets and How Do They Work?

Digital wallets are a type of service that allows users to store their payment information and make electronic purchases. This payment method can come in a few forms: mobile application, online service, or desktop software. 

For example, PayPal is an online service, but it also has an accompanying app. People can log into their accounts on the app or the website to use the service.

Digital wallets are sometimes referred to as mobile wallets and e-wallets. People can store credit and debit cards on them, as well as cash via a linked bank account. They can also hold other virtual items, like boarding passes, gift cards, rewards cards, concert tickets, and hotel reservations.

People can use digital wallets to pay in person or online. For in-store payments, digital wallets rely on wifi, Bluetooth, and magnetic signals to deliver payment data from a person’s device to the point of sale (POS) system. This usually depends on one of the following technologies: 

  • Near-field communication (NFC). NFC allows two smart devices to connect via electromagnetic signals by hovering the phone within about one and a half inches of the card reader.
  • Magnetic secure transmission (MST). MST is the same technology that card readers use to receive payment details from debit and credit cards. By hovering the phone close enough, it can deliver encrypted payment information to the point of sale system.
  • Quick Response (QR) codes. These matrix barcodes store information and initiate a payment when a user scans the code with their device’s camera.

When a customer makes a purchase online using a digital wallet, they just need to log into their digital wallet account and authorize the purchase, sometimes with a biometric. From there, the payment system connects to the processors, gateways, and any other third parties required to process the transaction.

Examples of Digital Wallets 

There are quite a few digital wallets to choose from. Below, we’ll highlight the three most popular options.


PayPal is an online payment system that operates in over 200 countries and accepts 25 different currencies. Users can connect their bank accounts or credit cards to their PayPal accounts. From there, they can make payments with any company that accepts PayPal by simply selecting this payment method, logging into their account, and authorizing the purchase.

Google Pay

Google Pay works with Android devices, including phones, watches, and tablets. Users just need to store their payment information on the app before making contactless payments online, in-app, or in person. Google Pay has more than 25 million users around the world and is available in over 50 different countries. 

Apple Pay 

Apple Pay is similar to Google Pay, but it’s made by Apple and works on Apple devices. Users with iPhones, Apple Watches, iPads, and Macs can log into their Apple Pay accounts, add cards or bank accounts, and make purchases on the web, in iOS apps, and in person. 

Apple Pay is popular, with 507 million users worldwide. Nearly half of all iPhone owners use Apple Pay.

The Pros of Accepting Digital Wallets

Digital wallets have grown increasingly popular over the years. Data from Juniper Research shows that 60% of the global population will use digital wallets by 2026. By accepting digital wallets, you give your customers the freedom and flexibility to pay how they want. Plus, a lack of payment methods is a top reason for cart abandonment. Offering digital wallets ensures you lose fewer sales.

Since people can pay with the tap of their phone, they can complete transactions in seconds. Comparatively, payments with cards or cash can take several minutes while users sign the card reader or count out bills. This can cut the wait time in lines dramatically.

Perhaps most importantly, digital wallets are safe. Each digital wallet works a bit differently, but all involve several layers of security. Rather than storing card information on the app, they use tokenization or encryption to replace the card information with a randomized number or code. On top of that, users must authorize purchases with a password or biometric.

So, even if someone did lose their device, others could not access their private information or make a purchase. That protects you, the merchant, from fraudulent sales and expensive chargeback fees

Aside from the benefits above, people love digital wallets for their convenience. It allows them to avoid carrying a physical wallet - or, at least, acts as a backup if they forget their wallet. As more folks depend on digital wallets, you can cater to their needs and become one of their favorite brands just because you allow them to use the payment method that’s easiest for them.

The Cons of Accepting Digital Wallets 

There are very few downsides to digital wallets for merchants, but they are worth considering. First, there are several types of digital wallets, and the most popular versions are device agnostic. That means you’ll need to accept more than one to avoid alienating any part of your target market. If you start accepting Apple Pay, it's best to accept Google Pay and perhaps even Samsung Pay.

You may run into customers who want to use a digital wallet but don’t know how and need assistance. In a brick-and-mortar store, this can slow down lines. Plus, you’ll need to train your staff so they know how to accept the digital wallets at the POS systems. 

Lastly, no payment method is 100% secure. There’s the potential for hackers to steal a customer’s card information from their digital wallet and use it to make purchases online. However, digital wallets use the same advanced security as credit cards do, then add another layer with two-factor authentication, so this is highly unlikely.

The Best Way for Your Business to Accept Digital Wallets 

You can easily accept digital wallets with as your payment service provider. You can add a variety of payment methods, like Apple Pay and PayPal, to your checkout page with a few clicks. Plus, if you decide digital wallets aren’t for you, removing them is just as simple. 

With, your customers get a frictionless checkout experience, including the option to save card information so that they don’t have to enter it next time. We also support global payment processing, so your customers get the same great experience no matter where they live - and you have limitless potential for growth.

Our solution is highly customizable. You can use our APIs and embed hosted payment fields directly into your website or application, keeping your customers within your own environment for their entire shopping experience. Or, choose our no-code solution and add your branding to a pre-built page. Either way, you’ll be up and running in no time.

Click here to get started with now!

The Bottom Line

Digital wallets are taking the world by storm - and for good reason. They’re fast, convenient, and safe. You can capitalize on their popularity and gain more customer loyalty by accepting this payment method. Although you’ll likely need to accept a few options to make every shopper happy, you’ll get loyal customers and secure transactions in return for your effort.

If you’re ready to start accepting digital wallets, it’s time to make the switch to Easily start accepting the most popular options, including Apple Pay, Google Pay, and PayPal. It’s as simple as checking a box. Plus, you’ll get access to our customizable checkout pages, in-depth analytics, advanced security features, and more.

Click here to create your account now!


How can an ecommerce business accept digital wallets?

Any ecommerce business can start accepting digital wallets by signing up with Our affordable payment system allows you to easily offer digital wallets, credit cards, and ACH transfers. Click here to sign up now!

Why are digital wallets critical for merchants?

Accepting digital wallets can increase customer loyalty. People seek out brands that accept their preferred digital wallet - if you start offering it, you can win their business. That means you can grow your sales.

What are the benefits of digital wallets for merchants?

Digital wallets are fast, so you can shorten wait time in lines. They also have extensive security measures, which help you avoid fraudulent transactions and chargeback fees.

How many payment methods should I accept on my website?

The number and type of payment methods you accept depend on your customer base. However, it’s generally best to accept at least four options to give your customers the flexibility they need. With, you can start accepting all major card brands, like Visa and Discover, as well as digital wallets, bank transfers, and more.

Meet the author
Ginny Dorn
Ginny Dorn is a finance and business copywriter specializing in credit card processing and fintech. She graduated from Western Illinois University with a bachelor's degree in family and consumer sciences.
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