Domain Knowledge The Digital Wallets

There are differences between Credit/Debit card and Digital wallets. Credit card processing explained in Cards domain knowledge. There’re some intermediate steps involved until your transaction is approved.

Digital Wallets

Managing money has always been one of the major concerns of every consumer. In the earlier times, people would manage their financial transaction through cash.

Later, the concept of plastic money i.e. the debit cards and credit cards gained popularity. However, these days, the shift of the retail sector into the digital space has given rise to the innovative concept of digital wallets. Read more the popular wallets across the world.


Wallets Evolution

Digital Wallet Apps

A digital wallet or e-wallet is an electronic application (usually for a smartphone) that stores your money in an electronic form to make ecommerce and various other online transactions safe and convenient.

Your account related data is stored into the digital wallet such that whenever you make a purchase, you don’t have to keep re-entering your credit card or debit card number to complete the purchase.

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James Altucher

In many ways, digital wallets have overcome the shortcomings of carrying a physical wallet. If you are the type of person, who does not fancy carrying around a stack of cash and cards everywhere, a digital wallet is the perfect solution for you.

All you need to carry is your smartphone for any kind of purchase you make.  

Digital Wallet Architecture

From "Merchant Acquirers and Payment Card Processors: A Look inside the Black Box" by Ramon P. DeGennaro. Economic Review. 2006.


  1. Time saving: A digital wallet saves a considerable amount of your time as you need not enter your card details every time you make a purchase. All your bank account related information is already stored in the digital wallet which makes it extremely time efficient and convenient tool for shopping.
  2. Security: There is a common misconception that is prevalent among the people that money in a digital wallet is not very safe. Digital wallets are highly secure as it offers a password security service to lock the wallet in order to prevent any kind of misuse.
  3. Track your purchases: With a digital wallet you can easily keep track of each and every transaction in real time.
  4. Lot of discounts: Digital wallets feature various attractive discounts for buying all kinds of product.

As per our research the Credit and Debit cards going to become one time use. Once you save the data into e wallets, you no need to carry cards with you.

It seems yes. According to USAA stories

The digital wallet in your smartphone may soon replace credit and debit cards as the benefits and simplicity of paying with your phone make reaching for plastic or cash inconvenient.

A digital wallet — often called a mobile wallet — is accessed through an app on your smartphone or other mobile device and enables you to digitally store and access items typically found in a physical wallet.


  • The terminal sends the merchant’s identification number, the card information, and the transaction amount to the card processor.
  • The processor’s system reads the information and sends the authorization request to the specific issuing bank through the card network.
  • The issuing bank conducts a series of checks for fraud and verifies that the cardholder’s available credit line is sufficient to cover the purchase before returning a response, either granting or denying authorization.
  • The merchant acquirer receives the response and relays it to the merchant. Usually, this process takes no more than a few seconds.

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Author: Srini

Experienced software developer. Skills in Development, Coding, Testing and Debugging. Good Data analytic skills (Data Warehousing and BI). Also skills in Mainframe.