A digital wallet allows you to store your debit and credit card details so you can pay for purchases using your smartphone or smartwatch.
But how does a digital wallet work, and how do you find the best e-wallet for your needs? Keep reading to find out.
What is a digital wallet?
A digital wallet, also called an e-wallet, works like an electronic version of your physical wallet. The software stores all your payment cards, bank account and financial password information — allowing you to safely purchase things in person or online using the app on your phone or computer. Digital wallets are becoming more widely used because they essentially eliminate the need to carry around a stack of plastic payment and loyalty cards.
Most digital wallets are mobile apps that allow you to store your debit and credit card details. You can then tap your phone to pay for purchases, and leave your cards and physical wallet at home.
You can also use digital wallets to store loyalty card details, your driver’s licence, gift cards, plane tickets and more.
How do digital wallets work?
Most digital wallets in Canada work through apps on your phone and use NFC (near field communication), a technology that allows devices to communicate when they get within a few inches of each other. The app authenticates your purchases through encryption and digital certificates to secure the payment processes from the consumer to the merchant.
But some apps also use other technologies to process payments. For example, older Samsung devices support magnetic secure transmission (MST) as well as NFC, so you can use your Samsung Pay mobile wallet at card readers that aren’t equipped for contactless payments. Others, such as PayPal, allow you to scan a QR code to make a payment.
Are digital wallets safe?
Digital wallets are generally considered safer than carrying around a physical wallet. None of your actual card numbers or passwords are physically stored on your device or in the cloud. Instead, each payment method gets assigned a unique code that’s only on your device.
And since your fingerprint or PIN is required to use the cards in your e-wallet, even if you lose your phone or have it stolen, no-one else would be able to access your digital wallet.
Compare digital wallets side by side
We’ve rounded up a list of popular digital wallets available in Canada so you can compare their features side by side and decide which is the best option for your needs.
Apple Pay
Google Pay
PayPal
Samsung Pay
Cards
Debit
Credit
Some loyalty cards
Some gift cards
Debit
Credit
Loyalty cards
Gift cards
Debit
Credit
Loyalty cards
Gift cards
Debit
Credit
Loyalty cards
Gift cards
Compatibility
iOS
Android
iOS, Android, Windows
Samsung devices
How to pay
In-app, online & tap in person
In-app, online & tap in person
N/A
In-app, online & tap in person
Send/receive/ request money
Rewards
Features
Used across all Apple devices
Offers “scratch cards” cash rewards and other prizes
Pay in person by scanning a seller’s QR code
Earn points with every purchase
Jargon buster
Common terms you’ll come across when comparing digital wallets include:
Near field communication (NFC). This is a method of data transfer that lets two nearby devices to communicate with each other through radio frequencies. Applications include contactless transactions, data exchange or a form of complex communication.
Contactless payments. This refers to payment methods that don’t require devices to touch. For example, swiping a debit card requires contact, while waving a phone over the reader is contactless.
Radio-frequency identification (RFID). This technology is the use of radio frequency to transfer data and information. NFC is a specific type of RFID used for contactless payments.
Encryption. This is way of encoding messages so that only authorized people can understand it. It’s used to keep your financial information safe from potential hackers.
Digital wallet apps in Canada
Let’s take a closer look at the features of the most popular digital wallet apps in Canada.
You can use Apply Pays in stores by simply holding your iPhone or Apple watch near the card reader and placing your finger on the Touch ID or using the Face ID feature. However, its main functionality really shines online with the Safari browser, where you can buy with any Apple device without needing to create a website account or give away any personal information. Your card number is not stored on your device or the Apple servers, letting you shop with added security.
With Google Pay, you can make purchases online or in person using your phone. Like Apple Pay, it’s available anywhere you see the contactless payment symbol. Google Pay is available for Android and iOS devices. Plus, Google Pay lets you add loyalty cards to your digital wallet so you can rack up points when you shop.
PayPal is one of the most popular ways to buy items online. You can link it to a debit card, credit card or bank account and use it at online stores all over the world. But if you want to use PayPal in stores, you’ll need to use Google Pay.
Another popular choice, Samsung Pay lets you pay online, in apps or in person using your Samsung device. It works a lot like Apple Pay or Google Pay, and uses your fingerprint, PIN or facial ID to verify your identity and keep your financial information safe.
Fitbit Pay vs Garmin Pay
There are also some digital wallets designed specifically for use with smartwatches. Fitbit Pay lets you use your smartwatch or fitness tracker to use credit, debit and transit cards. Just tap your watch or tracker wherever you see the contactless symbol. Fitbit Pay is available on the Sense 2, Sense, Versa 4, Versa 3, Versa 2, Versa Special Edition, Ionic, Charge 3 Special Edition, Charge 4, Charge 5 and Charge 6. You can use it to pay on Vancouver’s transit service and it is supported by the following banks:
ATB Financial (Mastercard)
Brim Financial (Mastercard)
Manulife Bank of Canada (Visa)
RBC Royal Bank (Visa)
Stack Canada Bank (Mastercard)
U.S. Bank Canada
Garmin Pay is Garmin’s contactless payment solution and you can use it with dozens of Garmin smartwatch models. It works with debit and credit cards from the following banks:
ATB Financial (Mastercard)
ATB (Mastercard)
Affinity Credit Union (Mastercard)
Aura (Mastercard)
Brim Financial (Mastercard)
CWB (Mastercard)
Manulife Bank of Canada (Visa)
Questrade (Mastercard)
STACK (Mastercard)
U.S. Bank Canada (Visa)
U.S. Bank Cardmember Services (Mastercard)
Zoomer (Mastercard)
How do I choose a digital wallet?
Keep the following factors in mind when choosing an e-wallet:
Compatibility. The type of phone you have will play a big part in determining which mobile wallet you choose. Apple Pay only works on Apple devices and Samsung Pay only works on Samsung devices, but Google Pay and PayPal work on both Android and Apple devices.
Where you bank. Apple Pay and Google Pay are widely supported by all major Canadian banks. But not all banks and credit unions support other mobile wallets such as Samsung Pay, so check which digital wallets you can access through your bank.
Security. Ensure that your digital wallet has a number of security measures in place, such as encryption for every transaction and two-factor authentication. Safeguards should also be in place to only bill you once if you tap twice by mistake. You’ll likely be required to set up a username, password and PIN.
Availability. Think about where you regularly shop in-store and online. Do all your favourite retailers accept mobile payments?
Pros and cons of digital wallets
Pros
Secure payment method. A traditional wallet can be stolen. Digital wallets use encryption to keep your financial information safe. Even if you lose your phone, you can still keep your cards secure.
Easy to use. You can keep all of your cards and accounts in one app to easily keep track of different payment methods.
No need to carry your wallet. With a digital wallet, you just have to take your phone with you and leave your wallet, cards and cash at home.
More than just payments. You can also use a digital wallet to store plane and event tickets, loyalty cards, gift cards, membership cards, your driver’s licence and more.
Cons
Not supported everywhere. Not every merchant supports contactless payment methods, which means that you’ll still need to use cash or a card at some stores.
Risk of theft. You’ll need to be careful when entering your password in a public place or leaving your phone unlocked.
Keep your phone charged. If you’re the type of person who always forgets to charge their phone, you’ll need to be extra vigilant to make sure you can access your digital wallet whenever you need.
Bottom line
Digital wallets offer a fast, simple and secure way to pay for purchases. Compare options to find the e-wallet that’s right for you. And to get the most out of it, compare bank accounts to find one that works seamlessly with the wallet you want.
Frequently asked questions about digital wallets
Major digital wallets from reputable providers, such as Google Pay and Apple Pay, offer secure and reliable payments. Check which payment methods your bank supports, and which mobile wallets are compatible with your device, to find the e-wallet that’s right for you.
The best mobile wallet for you will depend on factors such as the type of phone you have, where you shop and which cards you want to add to your digital wallet. Some mobile wallets are only compatible with specific smartphone operating systems, and are only supported by certain banks. Check which mobile wallets your bank and phone support before comparing the available options.
There are three types of digital wallets — open, semi-closed and closed. Open wallets are accepted by most retailers in-store and online, while semi-closed wallets can only be used at specific retailers. Closed wallets are issued by merchants and can only be used for transactions with that merchant.
The Samsung Wallet app lets you store your payment card details, digital passwords, membership cards and more. You can use the app to make purchases with Samsung Pay on an eligible Samsung device.
Google Pay and Samsung Pay are both secure contactless payment methods. However, Samsung Pay is only available on Samsung devices, while Google Pay can be used on Android and iOS devices.
You can remove a card from Apple Wallet by opening the app and tapping the card you want to remove. Then you need to tap the More button, Card Details and then Remove This Card.
Yes, you can use a cardless ATM to get cash using your digital wallet and your smartphone. But the technology is relatively new, which means that you won’t be able to get cash from all ATMs — you’ll want to look for a machine with the contactless symbol.
No, they’re not the same. Cryptocurrency wallets are apps or software solutions that allow you to save and transfer your cryptocurrency. For a detailed explanation of what they are and how they work, check out our guide to the best cryptocurrency wallets.
Tim Falk is a freelance writer for Finder. Over the course of his 15-year writing career, he has reported on a wide range of personal finance topics. Whether you're investing in stocks and ETFs, comparing savings accounts or choosing a credit card, Tim wants to make it easier for you to understand. When he’s not staring at his computer, you can usually find him exploring the great outdoors.
Whether you’re looking for a digital-only bank, a virtual bank account or a bank account you can access online, we help you find and compare the best online banks in Canada.
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