Digital wallets largely eliminate the need to carry a physical wallet by storing all of a consumer’s payment information securely and compactly. Also, digital wallets are a potential boon to companies that collect consumer data. The more companies know about their customers’ purchasing habits, the more effectively they can market to them. The downside for consumers can be a loss of privacy.
Digital wallets allow many in developing nations to participate more fully in the global financial system. Digital wallets allow participants to accept payments for services rendered, as well as receive funds or remittances from friends and family in other nations. Digital wallets do not require a bank account with a physical firm or branch, often allowing those in unbanked and underbanked communities, such as Black and Latinx neighborhoods and low-income or rural areas, to be served as well and therefore enables a wider financial inclusion.
Cryptocurrencies rely solely on digital wallets to maintain balances and make transactions, for instance with Bitcoin or other digital currencies.