Digital wallet: storing and sending money without a physical card
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Key takeaways
A digital wallet stores payment information electronically, letting you pay or receive money without a physical card.
It’s increasingly how people around the world send and receive money without a traditional bank account.
Digital wallets are covered by federal prepaid account protections when they can store funds.
For freelancers and remote workers, a digital wallet is often the easiest way to receive payment from international clients.
Confirming which specific digital wallets a recipient can use matters more than assuming any wallet works everywhere.
A digital wallet stores payment information electronically, and increasingly, it’s how people around the world send and receive money without a traditional bank account.
What is a digital wallet?
A digital wallet is an app or online service that stores payment information, and in many cases funds themselves, electronically rather than requiring a physical card. It can be used to make purchases, receive payments, and in many cases, receive an international money transfer directly, depending on the specific wallet and the corridor involved.
Why digital wallets matter for international money transfers
Most content focuses on digital wallets as a convenient way to pay for everyday purchases in developed markets. For international senders and recipients, the more relevant angle is receiving money:
Digital wallets that store funds are generally covered by federal prepaid protections. The CFPB’s prepaid rule extends coverage to mobile wallets and similar electronic accounts capable of holding a balance, giving users error-resolution and disclosure rights.
Not every digital wallet supports international transfers. Availability depends on the specific service and the corridor being sent to or from.
A digital wallet can be a practical option for freelancers. Receiving payment from an international client through a digital wallet can be faster and simpler than waiting on a bank transfer.
Digital wallets and international money transfers
For freelancers working with clients abroad, understanding the easiest ways to get paid internationally(opens in new window) often points to a digital wallet as one of the more accessible receive options, particularly when a client’s payment method doesn’t align neatly with a traditional bank transfer.
The CFPB’s finalized prepaid protections(opens in new window) specifically extend to mobile wallets and similar electronic accounts, meaning users of these wallets generally have the same kind of fee disclosure and error-resolution rights as traditional prepaid cardholders, a protection worth knowing about before relying on a digital wallet for regular income.
How a digital wallet actually stores your payment information
A digital wallet doesn’t typically store the actual card or bank account number directly on a device or within the app itself. Instead, most digital wallets use a process called tokenization, generating a unique substitute number that represents the card for the purposes of a specific transaction, without exposing the real account details to the merchant or, in some cases, even to the wallet provider itself. This is one of the underlying reasons digital wallets are often considered to offer multiple levels of security(opens in new window) beyond physically handing over a card, since even if a specific transaction’s token were somehow intercepted, it generally can’t be reused or reverse-engineered to access the actual account.
The growing role of digital wallets in cross-border commerce
Beyond domestic contactless payments, digital wallets are increasingly used as a bridge for cross-border transactions, letting a sender in one country pay a merchant or send funds to a recipient using a wallet service that operates across multiple countries and currencies. Some digital wallet providers have built specific partnerships or infrastructure enabling near-instant transfers between wallets held in different countries, which is part of why understanding whether a recipient’s preferred receiving method is a digital wallet, and which specific one, matters when choosing how to send money internationally.
Common questions about digital wallets
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Is a digital wallet the same as a mobile wallet?
The terms are often used interchangeably, though “mobile wallet” sometimes specifically refers to a wallet used through a phone, while “digital wallet” is the broader term covering any electronic storage of payment information, including on a computer. For most practical purposes, the two terms describe the same underlying concept.
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Can I receive an international money transfer directly into a digital wallet?
In many corridors, yes, receiving a transfer directly into a compatible digital wallet is an available money transfer delivery method, alongside bank deposit and cash pickup(opens in new window). Checking which specific wallets are supported for a destination avoids assuming compatibility that doesn’t exist.
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Are digital wallets safe to use for receiving international payments?
Digital wallets that store funds and are covered by federal prepaid protections generally offer meaningful consumer safeguards, including error-resolution rights. Choosing a well-established, regulated wallet provider, and registering it properly, provides the strongest protection.
In Summary
A digital wallet has become a genuinely practical way to send and receive money without a traditional bank account, and understanding its protections and international compatibility helps in using it with confidence. For freelancers and recipients of international transfers alike, checking whether a specific wallet supports the relevant corridor is the key first step.
This publication is provided for general information purposes only and is not intended to cover all aspects of the topics discussed herein. This publication is not a substitute for seeking advice from an applicable specialist or professional. The content in this publication does not constitute legal, tax, or other professional advice from Remitly or any of its affiliates and should not be relied upon as such. While we strive to keep our posts up to date and accurate, we cannot represent, warrant, or otherwise guarantee that the content is accurate, complete, or up to date.