July 1, 2025

Digital wallets vs. credit cards: How do they compare for your business?

Digital wallets have become an increasingly popular tool for small businesses, startups, and everyday consumers. In addition to being a convenient alternative to physical credit and debit cards, digital wallets can store and access a wide range of other assets, including cryptocurrency and concert tickets.

But what exactly is a digital wallet, how does it differ from a traditional credit card, and how can small businesses and startups benefit from using one? We cover the differences between digital wallets vs. credit cards, as well as how you can use the two together to boost efficiency.

What is a digital wallet?

Digital wallets, also known as electronic wallets, virtual wallets, or e-wallets, are applications or online services that allow individuals and businesses to perform fast and secure digital payments through a mobile phone or other electronic device. They help streamline payments and reduce wallet clutter by letting you store multiple payment methods, like credit and debit cards, in one place, accessible with just a few taps.

Digital wallets first gained popularity through early online payment platforms like PayPal, which were primarily used to facilitate e-commerce transactions. Since then, they’ve evolved to support a wide range of innovative and increasingly versatile features.

Today, in addition to sending and receiving online payments, you can use popular digital wallet apps like Apple Pay, Google Pay, PayPal, and Samsung Pay to make in-store purchases at a growing number of retailers, eliminating the need to carry around physical cards.

Most mobile wallets allow you to opt for contactless payments, where you make purchases by waving your mobile phone or smartwatch in front of a payment terminal. Beyond sending and receiving payments, digital wallets have become a popular tool to store a variety of virtual assets, including boarding passes, hotel reservations, and movie or concert tickets.

Digital wallets vs. mobile wallets

Digital wallets broadly refer to any software that lets you store credit and debit card information to make payments online or in mobile apps. Mobile wallets, on the other hand, specifically refer to apps that let you make contactless, in-person purchases using your phone or another mobile device instead of a physical card.

Digital wallets vs. credit cards: Key differences

You can make purchases using both digital wallets and physical or virtual credit cards, but their functions and offerings are very different.

Primary purpose

While credit cards give you access to a line of credit, a digital wallet comes with no issuance of debt. Digital wallets are simply a tool to more conveniently use an existing credit card or bank account.

Digital wallets and credit cards are fundamentally different yet complementary financial instruments. Digital wallets won’t replace credit cards because their existence is dependent on the credit cards in the first place.

Convenience and accessibility

Digital wallets are entirely virtual and built for speed and ease of use. You can tap your phone or smartwatch to make contactless payments in-store and breeze through online checkouts without manually entering card details.

Credit cards can be either physical or virtual and are more widely accepted, especially at businesses without mobile payment terminals. However, when stored in a digital wallet, credit cards become even more convenient and easier to use for contactless or online purchases.

Security features

Digital wallets offer additional layers of protection, such as tokenization, which replaces your actual card number with a unique, single-use code for each transaction. They also often require biometric authentication, such as fingerprint or facial recognition, adding another layer of protection against unauthorized use.

Traditional credit cards also provide strong security, including fraud monitoring and zero-liability protection, but they don’t benefit from the added device-level safeguards that come with mobile wallets.

Rewards and perks

Credit cards are the main source of rewards. Depending on the business credit card you have, you may earn cashback, points, or miles on your business purchases, alongside perks like welcome bonuses and built-in statement credits. Think points on office supplies, fuel, travel, or business dinners.

Digital wallets don’t earn rewards, but they do let you access and use your card’s rewards while benefiting from a faster, more secure checkout process. For example, you can use your rewards-earning credit card through Apple Pay or Google Pay and still enjoy all the same benefits.

Fees or costs

Most digital wallets are free to download and use, with no hidden costs or transaction fees. That makes them an accessible tool for individuals and businesses alike. Credit cards, on the other hand, often come with fees or charges, including annual fees, foreign transaction fees, late fees, and interest.

Are digital wallets safer than credit cards?

Overall, digital wallets are generally safer than traditional credit cards as long as you take the right security precautions. That’s because digital wallets rely on tokenization, generating a unique, single-use code for each transaction instead of transmitting your actual card number.

However, digital wallets aren't immune to threats. If someone gains access to your phone and you haven’t enabled strong authentication, or if your data is compromised in a breach, your digital wallet could still be vulnerable.

Enabling biometric authentication, such as Face ID on Apple devices or fingerprint scanning, adds an extra layer of protection, making it much harder for anyone to access your card information, even if your device is lost or stolen. To keep your digital wallet secure:

  • Make sure your device software and wallet apps are up to date
  • Set up push notifications or real-time alerts for transactions
  • Avoid using public Wi-Fi when making payments or accessing financial apps

These steps can help ensure your digital wallet remains a safe, convenient tool for managing payments.

Pros and cons of digital wallets

Before deciding whether to adopt digital wallets for your business, it’s helpful to weigh their key advantages and potential drawbacks:

Pros

  • Improved organization: Digital wallets remove the hassle of searching for the right card during a transaction. Plus, they can hold extra information or assets, such as loyalty cards, hotel bookings, and flight tickets. This feature is especially useful for business travel, ensuring all necessary items are conveniently accessible.
  • Convenience: Digital wallets streamline online and in-person transactions. For online purchases, digital wallets eliminate the need to manually input card details or personal and business-related information. For in-store purchases, many digital wallets let you complete transactions in seconds by waving your device near the payment terminal.
  • Security: A digital wallet’s tokenization process ensures all payment information is encrypted during checkout. You can further guard access to digital wallets through advanced identity verification methods, like facial recognition or multi-factor authentication.

Cons:

  • Limited acceptance: Although mobile payments are becoming increasingly common, not all merchants, particularly small or international vendors, accept digital wallet transactions. This could lead to friction during travel or unexpected purchases.
  • Requires setup and education: Not every employee will be familiar with how digital wallets work. You may need to spend time onboarding staff and make sure they understand how to securely add and use a company-issued card.
  • Security still depends on user habits: Although digital wallets offer strong encryption and biometric protection, they’re only as secure as the device and settings. Without proper authentication or up-to-date software, a lost phone could still pose a risk.

Should I pay with a digital wallet or a credit card?

For business owners, it’s not a question of choosing one over the other, but how to use both together effectively.

A business credit card is essential for managing cash flow, building business credit, and tracking employee spending. Once you issue employee cards to your team, adding them to a digital wallet can make payments faster, safer, and more convenient, especially for on-the-go or remote employees.

A hybrid approach gives your business maximum flexibility: Use credit cards for funding and rewards, and use digital wallets for streamlined, secure transactions.

Best digital wallets for business use

When selecting a digital wallet, most businesses prioritize two key factors: device compatibility and available features.

For example, companies using iPhones may prefer Apple Pay since it’s built into the device and requires no extra app. But if your team needs features like buying, selling, or storing cryptocurrency, a more crypto-friendly platform, like PayPal, MetaMask, or Trust Wallet, might be a better fit.

Here are six popular digital wallets worth considering:

1. PayPal

PayPal has spent decades establishing itself as a respected and reliable online payment service. Users can now make purchases using the platform’s mobile wallet at a large number of retailers across the U.S. and beyond. PayPal’s wallet application has the advantage of being available on virtually all smartphones and devices, but you’ll need a PayPal account to get started.

2. Amazon Pay

Amazon Pay streamlines the online shopping experience by allowing you to make transactions using the payment methods from your Amazon account. You can use Amazon Pay at an increasing number of largely U.S.-based ecommerce retailers, and it’s as simple as clicking the Amazon Pay icon at checkout.

Unfortunately, Amazon Pay is one of just a few popular options that typically don’t support in-person transactions.

3. Apple Pay

iPhone users will be hard-pressed to find a better option than Apple Pay, an intuitive digital wallet that takes only minutes to set up. After adding your business credit card or bank account information, you can use Apple Pay to make purchases both online and in person at a growing number of participating retailers.

In addition to serving as a convenient alternative to physical cards, Apple’s seamlessly integrated Wallet application allows you to store and access everything from boarding passes to gift cards. However, Apple Pay is exclusive to Apple devices, so those who prefer the Android operating system will need to look elsewhere.‍

4. Google Pay

Formerly known as Google Wallet, Google Pay predates Apple Pay by a few years while sharing many of the same basic features and advantages. While you can only use Apple Pay on Apple devices, Google Pay is available to download and use on virtually all popular mobile operating systems.

Google Pay offers similar features to Apple Pay but supports a mix of security methods, including PINs and biometrics, depending on the device. It also stores encrypted payment data on both your device and Google’s servers, whereas Apple Pay keeps payment credentials on the device only, which some users may prefer for added privacy.

5. Click to Pay

Introduced jointly by Visa, Mastercard, American Express, and Discover, the Click to Pay system streamlines the checkout process by allowing you to upload, save, and easily access multiple cards for online purchases.

Click to Pay consolidates the online checkout process into a few simple clicks. But unlike Apple Pay, Google Pay, and PayPal, it does not currently support contactless in-person transactions.

6. Samsung Pay

Samsung Pay is a versatile digital wallet designed for Samsung device users, offering both online and in-person payment options. Users can add credit, debit, and loyalty cards to their Samsung Wallet and make secure transactions using biometric authentication.

The Samsung digital wallet integrates with Samsung Rewards, offering cashback and other incentives for frequent use.

Digital wallets and credit cards work together with Ramp

Digital wallets and credit cards each offer valuable benefits, but using them together unlocks even more efficiency for small businesses.

With the Ramp Business Credit Card, you can integrate seamlessly with digital wallet apps your team already uses, making it easier to manage expenses, streamline accounting, and stay in control of company spending.

Here’s what your business can do when combining Ramp with a digital wallet:

  • Instantly issue and use virtual cards: Create virtual cards for employees anytime, at no cost, and let them start using them immediately through their digital wallets. No waiting for physical cards or manual entry.
  • Eliminate reimbursements: When you store Ramp’s Business Credit Cards in a digital wallet, employees always have secure access to authorized payment methods. This reduces the need for reimbursements and minimizes card loss or misuse.
  • Streamline transactions and control spend: Mobile wallet payments make business purchases faster, while Ramp’s built-in spend controls help prevent overspending and unauthorized charges, saving customers an average of 5% a year across all spending

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Ali MerciecaFinance Writer and Editor, Ramp
Ali Mercieca is a Finance Writer and Content Editor at Ramp. Prior to Ramp, she worked with Robinhood on the editorial strategy for their financial literacy articles and with Nearside, an online banking platform, overseeing their banking and finance blog. Ali holds a B.A. in Psychology and Philosophy from York University and can be found writing about editorial content strategy and SEO on her Substack.
Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.

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