The two kinds of digital wallet
A pass-through wallet holds credentials, not money. Apple Pay and Google Pay are the best known: each keeps a tokenised version of a card and presents it to a terminal or a checkout, and the payment is still a card payment between the issuer and the acquirer.
A stored-value wallet holds a balance. The customer tops it up from a card or a bank account, then pays merchants or other users from the balance, and the operator moves money between its own customers on its own ledger. Many stored-value wallets also issue a card, so that the balance can be spent wherever cards are accepted.
Who needs a licence to run a digital wallet
Holding customers' money is the regulated part. A stored-value balance generally counts as electronic money or a deposit, and issuing either takes a licence or a licensed partner behind the product. The operator also identifies each customer and keeps the customers' money apart from its own.
A pass-through wallet holds no money. Its provider's obligations come from the card schemes and the issuers whose cards it carries, not from a balance.
Digital wallet or crypto wallet?
- Crypto wallet
- Holds the private keys that control crypto-assets on a blockchain, not money in an account. Some apps combine both.
- Mobile banking app
- Gives access to an account at a bank. A wallet is a product of its own, holding credentials or a balance.
Where a digital wallet shows up in a platform
Modules that do the work
- LedgerThe double-entry book of record behind every balance, fee and transfer.
- Accounts & IBANsCustomer accounts with their own IBANs, on the partner bank and the rails you choose.
- Card issuingVirtual and physical cards, wallets and controls, on the issuer processor you choose.
- KYC / AMLIdentity checks, screening and ongoing monitoring, with the verification provider you choose.
Platforms that need it
Guides that go deeper
- How to launch a neobank without a banking licenceYour own e-money licence, an EMI's agent, a partner bank or a bank licence: how each route works, who holds the money, and what safeguarding and deposit protection cover.
- Stored value facility licence in the UAE: wallets and card appsWhen a wallet or prepaid card app needs the CBUAE's stored value facility licence: who needs it, capital, safeguarding the float, the licensing steps and the free zones.
- EMI or payment institution licence in the EU, and the agent routeWhat an e-money institution and a payment institution may do in the EU, the capital each needs, safeguarding, passporting, and launching as an agent first.