How Digital Wallets Like Apple Pay and Google Pay Work

In the US, paying at a physical cash register is increasingly a digital experience. A smartphone’s “wallet” can store copies of debit cards, credit cards, concert tickets — even driver’s licenses and car keys. Usage of digital wallets has surged in recent years as tap-to-pay technology becomes commonplace for everything from public transportation to buying gas or groceries. Some 62% of US consumers said they used digital wallets in 2023, compared with 47% in 2022, according to Federal Reserve surveys.

It’s an app that runs on a mobile phone, tablet, computer or other connected device, stores payment credentials, and enables financial transactions. Devices that run on Apple’s iOS, Google’s Android and other mobile operating systems come preloaded with wallet apps, and financial technology companies such as PayPal have their own apps and web-based payment services. (The biggest US banks also offer e-payments using their own app, Zelle, but that’s not considered a wallet because it doesn’t store money.) In-person tap payments are powered by near-field communication (NFC), a technology that enables devices that are within a few centimeters of each other to exchange information.