How to Create a Digital Wallet App: Features, Types & Tech Details

Digital wallets are no longer a mere commodity. They are an industry trend expected to blow up in the current decade. More smartphones, more e-wallet apps, and the emerging consumer requirements stimulate the demand for this FinTech solution.

Businesses can gain a lot from adopting digital wallet apps. Fast and secure contactless payments are the epitome of a client-centric approach. They build trust in a provider of products or services, fostering client and brand loyalty. Moreover, digital wallets offer many attractive cashback and discount options. It’s never too late to think of building an e-wallet app for your own enterprise.

Let’s look at the digital wallet applications, their core functions and development in greater detail.

What is a digital wallet app?

Digital wallet solutions are exactly what it says on the label. They are digital renditions of credit or debit cards contained in applications or on portable devices.

How does a digital wallet work? This fast and flexible solution enables money transfers via a smartphone, in physical and online stores. E-wallets spare the need of carrying one’s cards or constantly entering card data. They are extra protected, utilizing one of the safest transfer methods: tokenization.

These are some of the best digital wallet examples:

  • Apple Pay,
  • Google Wallet,
  • Samsung Pay,
  • Microsoft Wallet, and
  • PayPal.

What are the prospects of digital wallets? The e-wallet market has reached $269 billion in value as of 2023. As for the worldwide demand, it is assessed that it will have a CAGR of 22% and a $1,965 billion market value by the late 2033. Researchers estimate that the total number of e-wallet users will grow to more than 4.4 billion by 2025.


Types of digital wallet apps

Mobile wallets come in various types to satisfy individual requirements. Let’s look closely at the most in-demand apps and their functions:

1. Open wallets

Digital wallets issued exclusively by banks or institutions partnered with a different major bank.


  • Transactions at listed merchants/stores (online/offline payments)
  • ATM money withdrawal

Examples: PayPal, Venmo

2. Semi-closed wallets

Digital wallets with restricted coverage for specific merchants and locations.

Function: Transactions at specific merchants/stores (online/offline)

Examples: Stripe, Paytm

3. Closed wallets

Digital wallets for exclusive use with the issuer.


  • Transactions with specific product/service companies
  • Transactions with other users of the same closed wallet

Examples: Amazon Pay, Ola Money

4. Crypto wallets

Hardware or software for storing and utilizing cryptocurrency.

Function: Cryptocurrency transactions (sending, receiving, spending)

Examples: Coinbase Wallet, Electrum

5. Mobile banking extensions

Internet extensions for accessing banking services on portable devices.

Function: Limited banking services and transactions

Examples: Capital One, Bank of America


Advantages of digital wallets

Mobile wallets are becoming trendy for a number of good reasons. They are faster, more accessible, and safer than their traditional counterparts; but above that, mobile wallet technology is a convenient alternative to physical wallets.

The top benefits of a digital wallet are disclosed below:


Instead of cramming several cards into a wallet, users will only need a smartphone for making payments. Their first steps will be installing an application and setting up a personal account. After that, they are free to enjoy a smooth buying experience with extra-fast transactions.

Additionally, there is no need to enter card details with each and every payment. This information is already saved in the app for unlimited use.


Most e-wallets are client-centric and mobile-friendly. Money transfers take seconds to complete with significantly shorter waiting times. Users can preload funds to their online payment tool with a card or Internet banking.

For splitting a bill, e-wallets support sending or requesting funds from friends without any headache.

Improved security

Unfortunately, losing a physical card to thieves is not uncommon. Unlike the plastic cards, mobile wallet security systems can do more to protect transactions. Strong encryption, one-time codes for every transfer, and required passwords safeguard the funds at all times.

Even if a smartphone is stolen, criminals will have an extra hard time breaking in. Secure digital wallet purchases may call for additional verification steps.

Wide application range

Mobile wallets are a versatile solution for many financial needs. They give users an option to pay bills, book flights, and send money to their close ones globally.

What’s more, a lot of e-wallets can make transactions in various currencies. These turnkey apps cover many requirements, from transfers and payments to funds management.

Offers and rewards

Yes, e-wallets enable users to accumulate various forms of points. Purchase points and bonuses, promo codes, cashback, and more – it’s all there for their benefit. Many digital payment solutions offer various incentives, such as discounts for fuel or food.

There are also points systems for cash exchange. Using a mobile wallet doesn’t mean getting locked out of a buyer’s rewards.


Must-have features of an e-wallet

Digital wallets worthy of attention must come with a set of core features. Naturally, the more functions they offer, the better the user experience can be. Still, it is vital to know the basic ones for digital wallet development.

The core features must embrace the following:

  • User registration. For obvious reasons, a mobile wallet will not function without user IDs.
  • Bank account/card authorization. This is another indispensable step to making transfers.
  • Replenishing account/checking balance. Adding and managing funds is integral to any e-wallet app.
  • Transfers and receipts. Each and every transfer should be transparent and traceable.
  • Processing bills. As the name suggests, this feature enables paying bills with the help of an e-wallet.
  • Rewards and offers. A welcome plus for any wallet app, this feature will be loved by active shoppers.

Here are some extra features to make a digital payment tool more attractive:

  • loyalty cards,
  • special offerings,
  • bill splitting, and
  • push notifications.

Building a digital wallet app: Technical aspects

Mobile wallet development consists of several stages determined by the technical requirements. To create a digital wallet that will fly high, you must consider these key aspects:

1. Digital wallet type

First and foremost, choose from the types of digital wallets to better fit in with your concept. Payment processing model is another factor to consider before developing your app.

Wallets can use one of the following processing models:

  • Mobile service provider. Sending or receiving payments is done with the help of a mobile operator.
  • Short codes in SMS messages. The funds write-off is typically performed from a bank account, card, or mobile service.
  • Mobile web payments. Digital money transfers are carried out using a mobile app.
  • Near field communication (NFC). Transfers are enabled via a mobile app and integrated smartphone equipment. The latter allows for contactless interaction with a point of sale. Statistically, 94% of all smartphones across the globe support NFC payments, cementing their future popularity.

2. Legal requirements and standards

Regulatory conformance is an absolute must-have for launching a digital wallet app. Financial crimes, money laundering, and improper user identity verification may cause serious issues.

Mobile wallet companies must conform to the KYC (“Know Your Customer”) and AML (Anti Money Laundering) regulations. Working with payment card data calls for compliance with the PCI DSS standards. This is done to prevent potential fraud or data breaches.

As for data privacy, regulations such as GDPR (General Data Protection Regulation / EU) must be followed. GDPR sets the rules for collecting and processing personal information to secure user data.

Lastly, digital wallet providers must not forget about the local regulations. Companies operating in the U.S. must adhere to the BSA, USA PATRIOT and Dodd-Frank Acts. European-Union-based providers must abide by GDPR, PSD2, and AMLD. There are more regulations and licensing agreements that may apply.

3. Mobile wallet functionality

Ask yourself this question: is there anything that sets your solution apart from the rest? If the answer is “no”, you should seriously rethink your approach. The digital wallets of today must go beyond the basic payment features. Your ultimate goal will be adding more versatile functions to your application.

As an example, you can offer some upscale budgeting tools. History of transactions and flexible forms of payment are all fine, but why not add some more? Let the users set individual spending limits – and be notified about approaching them.

Another viable idea is to add unique offers prompted by users’ spending patterns and preferences. With so many e-wallets out there, your solution must put forward something special to handle competition.

4. Data transfer tech

This factor plays an important role in mobile wallet app development. The following data transfer types are commonly utilized in e-wallets:

  • NFC. This contactless remote tech enables transfers between a smartphone and a PoS. Its advantage over Bluetooth lies in the shorter connection setup period, being less than 1/10 of a second. NFC is used in any contactless devices as well as RFID structures. Its primary application areas are card emulation, reading, and P2P modes.
  • Bluetooth and iBeacon. iBeacon tech includes radio beacon in the non-contact data exchange while minimizing power consumption. The devices produce uninterrupted signals that are received by smartphones. The latter must support BLE and be within the range of transmission. Activating Bluetooth is required for receiving radio beacon signals. iBeacon tech enables personalized e-wallet offers near a store.
  • QR code payments. As the name suggests, users will have to scan a QR code from an invoice. A smartphone camera and a scanner app will take care of that. The next step will be making a transfer from a bank account. The receipt will then arrive in the email inbox to account for the transaction. This method is quite popular and open to most smartphone users.

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5. Security measures

Needless to say, nobody would like their funds to be stolen due to a hack or theft. Developing a secure digital wallet is hardly possible without the following:

  • Tokenization. This tech blocks the seller from accessing card details during payment. What it does instead is encrypt the card information, turning it into a token. A random symbol combination greatly decreases the possibility of data falling into the wrong hands. Unlike with encryption, tokenized data is irreversible and undecipherable.
  • P2PE (Point-to-point encryption). This tech makes a transaction secure in its entirety. Cardholder information is immediately encrypted when entering the PoS. It remains encrypted all the way until the payment processing stage. Consequently, the risk of data leakage for digital payments is reduced to the minimum.
  • Password protection. This tried and tested measure is a centerpiece of any security system. However, developers can improve on it by setting certain password requirements. For instance, the app must not accept hacker-friendly passwords. The latter should be complex enough to prevent breaches.

6. Payment SDKs for e-wallets

The software development kits enable payments from personal portable devices. The card entry form is embedded in a mobile payment app. The tokens are produced with the given card information or e-wallet apps.

Mobile SDKs have several advantages:

  • Easier integration. SDKs enable simpler and more effective mobile wallet application development. They contain everything for adding pre-built capabilities.
  • Increased security. Payment processing must be dependable and secure at all times. Compared to APIs, payment SDKs can offer more reliability and protection.
  • Cost-efficiency. With an entire SDK at their hands, developers get a good chance to reduce expenses.

7. Device compatibility

With so many portable devices around, a digital wallet is expected to be really versatile. There are solutions that support only iOS, Android, or specific smartphone brands. An ideal mobile wallet should cover the top popular mobile operating systems.

It should work not only on smartphones, but also on tablets and wearable gadgets. Ensure that you are not losing potential clients by limiting the wallet’s compatibility.

In conclusion

Digital wallet solutions are soaring in popularity; simple, accessible, and extra portable, they make carrying a bunch of cards obsolete. Mobile payments are readily accepted by the merchant outlets and stores across the globe.

They help customers process their bills and share funds with their close ones. Finally, they are much more secure than the traditional cards which are prone to being lost or stolen.

How to make a digital wallet app? Before all else, you must consider these core aspects:

  • deciding on the type of wallet,
  • abiding by the legal regulations,
  • adding popular features,
  • providing top security measures,
  • and more.

Want to entrust mobile wallet development to the professionals? Contact us to learn how our expertise and industry knowledge can be of help to your business.

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