Understanding digital wallet transactions

Essentially, digital wallet transactions are card transactions. The difference is they have an added layer of convenience and security on top, provided by a third party such as Apple, Google or Samsung, as a feature on a phone or mobile device. 

The user's card details are stored securely on the device, allowing for seamless payments by simply tapping their phone at a point-of-sale terminal in person, or using biometrics or passcode to authenticate a payment online via an app or website.

Here's a breakdown of how these transactions work:

1. Initiating the transaction: When a user chooses to pay with a digital wallet such as Google Pay, Apple Pay or Samsung Wallet, the merchant first retrieves the user's card details from the third-party provider.
2. Processing the transaction: The merchant then combines the card details, which may be encrypted, depending on the provider, with the transaction amount, other necessary data, and specific metadata that identifies it as a digital wallet payment. 
3. Finally, this information is sent through the card processing networks, just like a regular card transaction.

How to integrate digital wallet payments with Stitch 

Stitch provides access to all popular digital wallets, and manages payment processing through a single integration - whether in an app, on the web, with a client-hosted page or by leveraging our optimised hosted pages. We offer a pre-bundled set of SDKs, and offer hands-on technical support throughout the integration process.

Thomas explains: “Stitch manages as much of the end-to-end process as possible and provides SDKs, documentation, support and customer solutions where we work with merchants to build the payments into their infrastructure perfectly. We don’t have a one-size-fits-all approach.” 

For customers, digital wallet payments are faster and easier than card payments. Once registered using Apple Pay, Google Pay or Samsung Wallet, customers don't need to enter their  details to make an online card payment; they can simply select their digital wallet and make a wallet payment in one click. Additionally, as a layer of security is provided by on-device biometrics, many of these transactions can be completed instantly without being interrupted by 3DS authentication.

Looking ahead

So far, we’ve focused on making it easy for any business to leverage digital wallets alongside card or Pay by bank methods. 

Looking ahead, Thomas explains that “in e-commerce specifically, we’re very excited to be launching ‘instant buy’ and ‘instant checkout’ features through some of the wallets. Because a customer would already have their shipping information and other important details stored in their wallet, we’d be able to provide an even more seamless, one-click payments experience, which is expected to offer very high conversion rates for e-commerce and retail partners.”

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FAQs

What is a digital wallet transaction?

A digital wallet transaction is a payment made using a wallet app that securely stores a customer’s card or bank details, allowing them to pay quickly without re-entering information.

How do digital wallet transactions work?

Digital wallets tokenise payment details and authenticate the user before sending a transaction to the payment network, ensuring speed and security during checkout.

Are digital wallet payments secure?

Yes. Digital wallets use encryption, tokenisation, and device-level authentication such as biometrics or PINs to protect user data and reduce fraud risk.

Which digital wallets are commonly used by consumers?

Popular digital wallets include Apple Pay, Google Pay, and other mobile or app-based wallets supported by banks and payment providers.

Why should businesses accept digital wallet payments?

Accepting digital wallets improves checkout speed, reduces friction, increases conversion rates, and supports modern consumer payment preferences.

Do digital wallets work for in-store and online payments?

Yes. Digital wallets support both in-store contactless payments and online or in-app transactions, making them suitable for unified commerce strategies.

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