Credit Card Processing

Digital Wallets: Intro to Apple Pay, Google Pay, and more

by Ben Dwyer

Digital wallets (like Apple Pay) are a way to pay for goods and services using your compatible smartphone or smartwatch instead of pulling out a physical credit card.

But what are these digital wallets, exactly, and how do they work?

What is a digital wallet?

A digital wallet refers to electronic devices and programs used for making payments for purchases digitally, without presenting a physical credit card, debit card, or cash. The term digital wallet may refer to both an electronic device that stores payment information (such as a smartphone) and the program or app used to make the payment. (Such as Apple Pay, Google Wallet, PayPal.)

Some digital wallets can also be used to hold other information, such as store loyalty cards or gift cards.

How does it work?

There are two main types of digital wallets: device-based and internet-based.

Device-based digital wallets use near field communication (NFC) technology to allow users to pay for purchases without handing over a credit or debit card. Instead, customers can wave their phone or other NFC-capable device near a contactless reader.

Compatible Samsung Pay phones will also work with traditional magnetic stripe terminals. With terminals that aren’t capable of accepting contactless payments, Samsung Pay emits a magnetic signal that allow a phone to be used like a traditional magnetic stripe card by sliding it above the magnetic stripe reader.

Apple Pay and Samsung Pay are examples of device-based digital wallets because they require paying using an iPhone, Apple Watch, or Samsung phone. Google Wallet and PayPal both offer apps that can be added to compatible phones, allowing them to be used as device-based digital wallets in store. However, Apple Pay can also be used online.

Internet-based digital wallets let customers add credit or debit card information to a personal account or profile. Information is kept on file and when customers make a purchase online, they sign into their account and use it to pay for their purchase. This type of digital wallet allows users to pay for online purchases without providing their card details to the website from which they’re shopping. PayPal, Google Wallet, and Apple Pay are examples of internet-based digital wallets, because they don’t require purchasing through an app or with a phone, instead using a customer’s online profile and saved card information to pay.

Internet-based digital wallets are most commonly used for paying for products from a website, but may also be accepted as a payment method for takeout meals, delivery services, donations, and other prepaid purchases.

Major Digital Wallets

As of summer 2023, there are several major digital wallets available to consumers.

Apple Pay

Apple Pay is Apple’s proprietary digital wallet. Available for iPhones, Apple Watch, and some iPads, Apple Pay utilizes NFC technology and can be used in many locations that have contactless terminals. It can also be used as an internet-based digital wallet to pay for purchases online.

Initially, some major retailers didn’t support Apple Pay even with contactless terminals. This was due to an exclusivity agreement for retailers that are part of the group Merchant Customer Exchange (MCX) with the understanding that they would use MCX’s upcoming digital wallet, called CurrentC. Such retailers include Walmart, Target, Gap, CVS, and 7-Eleven. CurrentC exclusivity expired in 2015, and some MCX retailers subsequently began accepting Apple Pay.

Google Pay

In January 2017, Google announced that it was rebranding Android Pay and Google Wallet as Google Pay. The move seems aimed at clearing up customer confusion, especially with the changes Google Wallet went through over the years.

Originally a mobile wallet, Google Wallet changed in early 2016. It was then only usable in apps or for sending money to people you know, unless you have a Google Wallet card. The Google Wallet card was used for ATM withdrawals and purchases in stores. Google Wallet was not usable with your phone to pay in stores, like many other digital wallets. However, Android Pay (also owned by Google) was.

Many customers seemed confused as to when they would use each option, and there was sluggish adoption of both Google Wallet and Android Pay.

Android Pay was Google’s in-store smartphone payment option. Like several of the other smartphone payment options, Android Pay used NFC technology to enable payments by tapping a phone to an NFC-enabled terminal. As its name implies, Android Pay worked with Android devices.

In July of 2016, Grubhub announced that customers could pay for both delivery and takeout orders using Android Pay. In August of 2016, Walgreen’s announced that its loyalty program is compatible with Android Pay. Then, in September 2016, Android announced that Chase credit cards are now compatible with Android Pay. In April 2017, PayPal announced that customers could use PayPal through Android Pay.
Currently, both of these options are available as Google Pay. Any payments you make using your Google accounts will be done through Google Pay.

Samsung Pay

Available from electronics giant Samsung, Samsung Pay launched in 2015, compatible with the Samsung Galaxy S6 smartphone and later models. It utilizes both NFC and MST technologies, allowing acceptance at locations that have contactless payment terminals or traditional magnetic stripe terminals.

One major difference between Samsung Pay and other digital wallets is Samsung’s ability to pay using traditional non-contactless terminals. However, many businesses are upgrading terminals for the EMV liability shift, so terminals that aren’t currently NFC-capable may be soon.

In July 2017, PayPal announced that customers could soon use PayPal through Samsung Pay.


PayPal is best known as an internet-based digital wallet for paying for purchases from shopping websites, but in 2016 the company made major strides for acceptance in store by signing agreements with Mastercard and processing giant First Data (now owned by Fiserv). Customers now have the option of using the PayPal app or a PayPal Mastercard to make purchases in store. The PayPal app is a tap-to-pay NFC option like Apple Pay. More information can be found in our article Taking PayPal In Store.

Additionally, PayPal reached agreements in 2017 with both Android Pay and Samsung Pay to allow customers to use PayPal through those two digital wallets.

Chase Pay, now Zelle

In autumn 2015, JPMorgan Chase confirmed a mid-2016 launch for its own digital wallet, called Chase Pay. Chase Pay worked both Apple and Android devices, but is limited to Chase Visa cards. Unlike other digital wallets, which use tap-to-pay functionality, Chase Pay relied on scanning QR codes to pay for purchases.

Chase Pay has since been discontinued, first having been tried as Chase Quickpay. It is now just called Zelle, though originally the two were different. Zelle is owned by a group of banks that includes JP Morgan Chase. Many consumers are already familiar with Zelle, which functions as a way to send and receive money through an app.

Walmart Pay

In mid-summer of 2016, Walmart rolled out its own mobile wallet, which it had announced the year before. Called Walmart Pay, the wallet uses QR codes instead of a tap-to-pay function. Android and Apple phones will work, and the company boasts that support for all cards. To use Walmart Pay, you’ll need to first download and open the Walmart app. When you make a purchase at Walmart, a QR code and Walmart Pay logo will appear on the credit card machine. You’ll be able to scan the code if you’d like to use Walmart Pay, or choose a different payment option.


There is no fee to consumers to use digital wallets, and only PayPal lists specific rates and fees that businesses pay to accept PayPal.

Apple Pay, Samsung Pay, and Android Pay don’t charge additional fees. Businesses will pay their current processing rates and fees on the digital wallet transactions, and will be responsible for liability according to the same terms as other payment types.

Staged Digital Wallet Costs

In general, digital wallets won’t cost more to take at your store. An exception is “staged” digital wallets, or wallets that complete a transaction in two parts. The first part is collecting money from the customer and the second part is remitting it to your business. In a staged wallet transaction, you don’t necessarily know which card brand the consumer used to pay, and card details aren’t passed to the issuer or credit card network. Because of that, Visa has chosen to implement a “staged digital wallet fee” on such transactions.

PayPal is an example of a staged digital wallet, so if you take PayPal transactions, you may be affected by the Visa fee. Wallets like Apple Pay are not staged wallets and not subject to the staged wallet fee.

Read More: Staged Digital Wallet Fee.

Accepting Digital Wallet Payments

Getting set up to accept digital wallet payments can be done through your current processor, or you can find a processor through CardFellow. To accept digital wallet payments in person, you’ll need compatible point-of-sale equipment. Equipment requirements will vary depending on which payment types you wish to accept.

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