What is a digital wallet & how does it work?

A digital wallet lets you make payments in stores, online, or in apps with just one wave or tap of your smartphone. But how do you set your digital wallet up, and which one should you choose? Keep reading to find out.

Contactless payment with a smartphone.

Digital wallet, defined

Digital wallets are online payment tools, usually in the form of an app. The wallet securely stores virtual versions of debit and credit cards, so you don’t need to enter your card details or carry a physical card at all to make payments. Save digital tickets and e-vouchers here, too, so you always have the documents you need on hand.

A Guide to Contactless Payments.

How does a digital wallet work?

A digital wallet uses app software to link your payment details from your connected bank account to the vendor that the transaction is being made with.

Different apps allow different access—open wallets (accepted at most retailers) enable online purchases, contactless in-store payments, and cashback, and may even allow withdrawals at select ATMs.

Semi-closed and closed wallets allow certain transactions with a set group of retailers, or only with the retailer that issued the wallet.

Downloading your digital wallet

Getting a digital wallet is straightforward and usually just takes a few minutes. Just download your chosen digital wallet app, enter the details from your eligible debit or credit card, and start spending straight away.

When you open an N26 account, you’ll instantly receive your own virtual N26 Mastercard right on your smartphone. Link it with Apple Pay or Google Pay and within seconds you can make payments from your very own mobile wallet.

Apple Pay

Payments with Apple Pay are verified using Touch or Face ID, so you can have maximum security with minimal effort.

Google Pay

Google Pay uses NFC technology so you can pay with a fingerprint or a password, and your card information is always encrypted.

Samsung Pay

Samsung users can also set up Samsung Pay, another widely accepted electronic payment system equipped with MST and NFC technology.


Add your virtual N26 Mastercard to PayPal so you can check out with a single tap anywhere PayPal is accepted.

Blog Header - Product Evolution - App screenshot.

The advantages of digital wallets

Digital wallets are easy to use. No more filling in your card details every time you check out, or fumbling for your wallet at the store. Your payment information is saved in one protected, central location. The card number is never stored in the app itself, but is instead assigned a unique virtual number. This protects your money even if your smartphone is lost or stolen. Still, always research the digital wallet issuer before testing it out, just to make sure it’s legitimate.

What is a digital wallet?

Digital wallets are electronic payment systems that allow the user to store funds, make online or in-store purchases, and track their payment history using a smartphone app or similar device app feature.

How does a digital wallet work?

Digital wallets use electronic software technology to link the connected checking account to the vendor where the transaction or purchase was made. They are used like physical cards or cash to make purchases or transactions virtually—and therefore, instantly.

Are digital wallets safe to use?

Most digital wallets encrypt banking details and personal information and should never store the card number of the checking account. Always check on the viability of wallet issuer first, ahead of activating a digital wallet.

Are there different types of digital wallet?

There are different types of digital wallet that access different things. Open wallets allow a range of transactions, accepted at a large number of retailers. Semi-closed and closed wallets only allow transactions with a certain group of retailers, or only the retail company that issues that wallet.

Does N26 Bank have digital wallets available?

All N26 accounts have digital wallet technology access available with their banking app and are also partnered with payment platforms Apple Pay and Google Pay. You can open your N26 bank account in minutes and start using your digital card straight away by adding your card to your mobile wallet.

Do I need my card to pay for things?

As long as you have an NFC-equipped smartphone, you’ll no longer need to bring your physical card with you. You’ll be able to pay for things at a variety of bars, restaurants, and shops safely with your virtual card.