What are Top 3 Types of Digital Wallet?

"The diagram below shows 3 types of B2C digital wallets.

A digital wallet is a software that securely stores users' payment information. Users can make electronic transactions online or in-store with digital wallets.

Depending on what information is stored in the digital wallet, we have 3 types of digital wallets.

🔹 Pass-Through Wallet

Pass-through wallets store tokenized card information and it doesn't hold any funds. When we initiate a payment transaction with a merchant, the token goes to the acquirer and then to the card scheme, just as credit cards do. The card scheme decrypts the card information and sends to the card issuer to verify. In this process, only the card scheme and the issuer know about the account details.

Since the wallets don't know the account details, pass-through wallets are considered secure and an extension of credit and debit cards.

🔹 Staged Wallet

Staged wallets store encrypted payment details but don't send them anywhere. The transaction is broken down into two stages: the funding stage and the payment stage. At the funding stage, the money is transferred from various funding sources including bank account, debit/credit card, prepaid balance and other wallets. At the payment stage, the wallet transfers funds to the merchant.

🔹 Stored Wallet

Stored wallets hold prepaid balance from various sources including bank accounts, cards and peer-to-peer transfers. Then in a payment transaction, the funds are transferred to the merchant."

Author

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