What is the difference between digital wallets and other money apps?

In this guide, explore some of the key features, functionalities of digital wallets and money apps.

What is a digital wallet?

A digital wallet, sometimes known as an e-wallet, generally allows individuals to send, receive, and manage money and complete transactions. Think of it as a virtual version of a traditional wallet with credit cards, cash, or cheques.

Digital wallets may securely store payment information such as credit card details, bank account numbers, and even cryptocurrency.

People can use a digital wallet to make online purchases, pay bills, send money to others, and conduct contactless in-store payments via smartphones or other devices.

Digital wallet vs. mobile wallet

A digital wallet is a broad term that covers different types of electronic wallets. On the other hand, a mobile wallet is a type of digital wallet designed specifically for mobile devices like smartphones and tablets. In Australia, mobile wallet transactions surged to $93 billion, according to recent data.¹

Learn more about digital wallets.

What are money management and other payment apps?

While digital wallets are versatile tools designed to securely store payment methods and perform transactions, money management and other payment apps typically have specialised functions related to financial management.

There are many different types of money management and payment apps. Here are some common examples:

• Money management apps: These apps are designed to help people track, budget, and manage their finances effectively. They often offer features like expense tracking, budget creation, investment tracking, and financial goal planning. Learn more about budgeting and saving.
• Peer-to-peer payment apps: Peer-to-peer payment apps are primarily used for transferring money between individuals or splitting bills. They may not always have the functionality of digital wallets, such as storing multiple payment methods.
• Mobile banking apps: These are provided by banks and building societies credit for account management, checking balances, and conducting banking activities on mobile devices.

Potential advantages and disadvantages of payment apps

Before downloading a payment app, consider the potential advantages and risks.

Potential advantages:

• Convenience: Payment apps allow individuals to make transactions, pay bills, and transfer money with just a few taps on their smartphones or devices. They eliminate the need for carrying physical cash or cards and may reduce the time spent on traditional payment methods.
• Security: They often incorporate security measures, such as encryption, biometrics (fingerprint or facial recognition), and two-factor authentication, to help protect financial information. They often include fraud protection and real-time transaction monitoring.
• Accessibility: These apps are generally contactless and accessible 24/7, allowing individuals to manage their finances and make transactions at any time, from anywhere, and with an internet connection.

Potential risks:

• Security: While payment apps are generally secure, they may not always be immune to cyber threats and data breaches. It’s important to remain vigilant and ensure the security of login credentials and devices.
• Transaction fees: Some payment apps may charge transaction fees, particularly for certain types of transfers or international transactions.
• Privacy: Payment apps may collect user data for marketing. Be cautious about sharing personal information and review privacy policies.

Look for payment apps that offer security features such as multi-factor authentication, notifications, and fingerprint scanning to help make payments with peace of mind. Learn more about how to send money and request money. Plus, learn more about paying with QR codes.