A digital wallet refers to an electronic device that allows an individual to make electronic transactions.
This can include purchasing items on-line with a computer or using a smartphone to purchase something at a store.
An individual's bank account can also be linked to the digital wallet. In addition, a person might also have their driver's license, health insurance and other ID documents stored on the phone. The credentials can be passed to a merchant's terminal wirelessly by means of (NFC) near field communication .
Increasingly, digital wallets are being made not just for basic financial transactions but to also authenticate the holder's credentials. The system has gained popularity in Japan, where digital wallets are known as "wallet mobiles".