How does the digital wallet app work

Cash or with a card? According to surveys *, more than half of Germans still prefer to pay in cash when traveling. But in times of corona, the proportion of cashless payments is growing steadily. According to a current representative Bitkom study, more than three quarters of those surveyed paid at least once contactlessly with a card, smartphone or smartwatch in the last few months at the end of the year. While contactless bank cards are still the most popular method of choice for us, above all the girocard, mobile wallets have long been standard in other countries. But how well can you rely on them when traveling? Here is an overview of the most important information about contactless mobile payment with smartwatch or smartphone:

What exactly is a mobile wallet?

A mobile wallet is a kind of virtual wallet that is operated via an app on the smartphone or via wearables such as smartwatches. To pay you have to top it up with a prepaid credit or you simply add the desired bank card to your wallet. The individual payment processes are debited from this.

Depending on the app, you can add other functions to your mobile phone or smartwatch wallet - such as tickets, cards, vouchers, coupons, customer cards or ID cards - and save them in the wallet automatically and keep them up to date with updates. In the USA, you can also send money to friends or family using wallets.

Which mobile wallets are there?

Since the number of acceptance points is increasing in Germany, there are more and more retailers where you can pay on the go. Rewe, Aldi, Edeka, dm and petrol stations are now using card readers that read smartphones or watches in addition to contactless bank cards.

No matter whether Android or iOS: Wallet apps are in abundance. But this makes the market very confusing for users. In addition to the large smartphone players, almost all banks and financial service providers such as B. PayPal or Klarna offer mobile payment, but also companies such as Payback and Lufthansa via their combined customer and credit cards.

The Apple wallet with Apple Pay and the Google Wallet as Google Pay are most common in cashless payment transactions with us. Many banks are now integrated here or they offer their own extended apps for mobile payment.

Other apps such as "WalletPasses", "Stocard" (for customer cards) or "Pass2U Wallet" do not have a payment function, but offer a range of other practical features for e-tickets, passes, e-coupons or travel documents.

What is the technology behind it?

Most mobile pay wallets work technically with NFC (Near Field Communication), an international transmission standard. If you hold your cell phone or watch up to the reader, payment is made automatically. Another option is to pay using a QR code, which is displayed on the mobile phone and scanned at the checkout (this is common in China, for example, or at PAYBACK PAY). New technologies such as Bluetooth Low Energy (BLE) are also used.

How well does mobile payment work when traveling?

Check in at home and save the ticket in the wallet: Because more and more people are saving their documents digitally, many airlines are already slowly but surely dismantling their check-in machines. Mobile payments can also be made in the rail travel centers and in on-board catering. Discovering a strange city spontaneously with the e-scooter? Borrow, pay and activate directly - it only takes a few minutes with your wallet. And you always have an overview of your travel expenses via the wallet. When setting up, make sure that "NFC" is activated in your mobile phone settings.

While the use of pay apps is widespread in the Scandinavian countries and makes traveling so comfortable, it may not always work perfectly in other countries. Because the dealers are not equipped everywhere, the device may be broken or the internet connection is insufficient. For smaller amounts, payment usually works without an internet connection, but you cannot rely on it.

As a backup, it is therefore still advisable to have a second payment option or some cash with you. In Germany it sometimes depends on the amount, for example if a card payment - and thus also via mobile phone - is only possible from 10 euros.

How safe is it to pay with a smartphone or smartwatch?

Depositing the credit or giro card in the wallet and paying with it worries many users. The lack of trust is one of the main reasons why use in Germany is more restrained than abroad. In principle, the same security standards apply to mobile payments as to digital banking. Providers use different authorization procedures to store credit cards. However, misuse of the data can never be ruled out here either.

  • Apple: Apple Wallet is preinstalled on all iPhones. When paying over Apple Pay you authorize the process at the checkout with your fingerprint or face recognition. You can only save one credit card as a means of payment. Except for Sparkassen: Sparkasse customers can also link their Apple Pay account to their giro card.
    As far as the data is concerned, Apple says it does not store any personal bank details or information about purchases on the servers in its privacy policy. The payment transactions are transmitted in encrypted form and verified at the establishment using security codes.
  • Google: The Google wallet Google Pay, which is mostly already pre-installed on the Android devices, can also be done with a Paypal account link. So you can pay free of charge with your smartphone even without a credit card. The payment is debited from the PayPal balance or current account. The credit cards stored in the PayPal account do not yet work for mobile payments. Google processes the authorization of the payments with a one-time token, stores the necessary data, but according to its own information does not pass it on to dealers, banks or other service providers.

If you can't or don't want to add your credit card directly, you have a third option: a virtual prepaid card. So another connection between the actual wallet and the bank account. German provider for this is for example "VIMpay" based on Mastercard or the Swedish payment provider Klarna.

Which mobile wallet to choose? Checklist for your facility:

  • Which operating system? Google Pay also works with the Paypal app; Apple Pay is only possible with a credit card (also with a Girocard for Sparkasse customers). Alternatively, there are app providers for virtual credit cards independent of the current account (e.g. "VIMpay" or "Klarna-Card")
  • Which mobile banking app does your own bank offer? Simply check and test which app works better in everyday life or offers the best added value.
  • Use wallets without a payment function? Test helpful features for tickets, cards & Co. via alternative providers to Apple & Google wallets in the stores. Depending on the country, Apple & Google Pay expand their services to include additional banking functions.
  • Comfort and security? Registration and payment must be practical; don't forget to check the most important security standards.
  • Have a second payment option with you on the way to be on the safe side.

What are the fees for paying with mobile wallets while traveling?

Regardless of the mobile wallet, ask your bank in advance how high the transaction fees are when using your giro or credit card abroad. Because that is handled differently. As far as the fees for the data volume for on the go, one is on the safe side within the EU since the end of the roaming fees. Outside the EU, you should check the tariffs before traveling and, if necessary, book a local data package for the country of travel.

What to do if the smartphone is stolen

Documents, passports and means of payment are essential when traveling. It is not uncommon for these documents to be lost or passports and credit cards to be stolen. Digitally protected in an app, it is not so easy for strangers to get hold of confidential data.

But if the cell phone is stolen, the virtual wallet is gone too. Therefore, make sure that you have set up the highest security level for your Google or Apple account. If you have lost your device and activated a tracking app (e.g. "Find my Iphone" at Apple), you can set it to "lost" and temporarily deactivate "mobile Pay".

What to do if your cell phone or smartwatch is stolen:

  1. Have the SIM card deactivated by the mobile operator.
  2. Have your (virtual) bank card blocked by the bank or the central blocking hotline 116 116.
  3. Report theft to the police.

Use of mobile wallets abroad: Top 5 countries

China, USA, Great Britain, Brazil and South Korea - these are the markets with the highest growth rates in mobile payment. *** With the highest mobile sales worldwide by far from China - with the market leaders WeChat and Alipay. Large growth is expected in the next few years, especially in emerging countries such as India and South Africa. Because most people there have a smartphone, but often no computer or bank account, and thus process all payments on the move using prepaid credit.


* Postbank / Kantar Emnid Emnid survey 2019: Cash while traveling - the most important means of payment on vacation: 56 percent of German travelers prefer cash payments

** Bitkom Research 2020 survey: Contactless payment in Germany - repr. Survey for the period September to December 2020

*** Statista Global Consumer Survey - Mobile POS Payments worldwide 2020