Digital wallets
Tokenised wallet transactions carry device authentication data, encrypted cryptograms and distinct settlement requirements across mobile environments. Cardflo supports digital wallets through one orchestration layer that maps payloads and applies multi-acquirer routing.
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Cardflo provides comprehensive support for a range of digital wallets. Offering these payment methods caters to modern consumer preferences for speed and security, reducing checkout friction.
Integrating diverse digital wallets helps expand your customer reach and improve conversion rates by allowing customers to pay how they prefer.
Digital wallets increase mobile conversion by streamlining the checkout process through tokenisation and biometric authentication, securing data and speeding up transactions. Cardflo's platform supports a wide array of global wallets, enhancing payment flexibility and security.
Digital wallets overview
Digital wallets serve as software-based containers that store a user’s payment credentials, including debit and credit cards, alongside local payment methods. In the payments stack, these wallets act as an abstraction layer between the consumer and the underlying issuer.
When a customer selects a digital wallet at checkout, the transaction typically employs device-level security such as biometrics or passkeys to authenticate the user. The wallet provider communicates with the gateway and acquirer to facilitate an authorisation request.
This process often utilises tokenisation, where the primary account number is replaced by a device-specific token to minimise the risk of sensitive data exposure.
By integrating these methods via a PSP or payment orchestrator, merchants can accept various domestic and international schemes through a single interface, ensuring compliance with Strong Customer Authentication mandates while reducing the manual entry of card details.
How digital wallets works
Credential storage and tokenisation
The user adds a payment card to their digital wallet, which then requests a virtual token from the card scheme and issuer. This process replaces the actual card number with a device-specific identifier, ensuring that the merchant never handles the original sensitive data during the transaction cycle.
Customer authentication and intent
At the point of sale, the customer selects the wallet as their preferred method. The wallet application prompts the user for biometric verification or a passcode. This step fulfils the requirements for Strong Customer Authentication under PSD2 regulations, providing a secure method to verify the cardholder's intent.
Encrypted payload transmission
Once authorised by the user, the wallet generates a secure, encrypted payload containing the payment token and a one-time security cryptogram. The gateway receives this information and routes it to the acquirer, who then passes it through the card schemes to the relevant issuing bank for validation.
Authorisation and settlement
The issuer verifies the token and cryptogram against their records to approve the transaction. Upon approval, the gateway receives an authorisation code. The funds are then processed through the standard clearing and settlement pipeline, eventually reaching the merchant's account according to their agreed payout schedule.
Why digital wallets matters
Enhanced security and compliance
By leveraging biometric authentication and network tokens, digital wallets mitigate the risk of fraudulent activities and friendly fraud. The use of dynamic cryptograms for each transaction ensures that intercepted data cannot be reused for subsequent purchases. Furthermore, the inherent support for two-factor authentication assists merchants in meeting regulatory standards for technical security without imposing additional hurdles on the customer.
Increased authorisation success
Transactions processed through established digital wallets often exhibit higher authorisation rates compared to traditional card-not-present transactions. The verified nature of the payment, combined with the presence of cryptograms, provides issuers with greater confidence in the legitimacy of the request. This leads to fewer false declines and a more stable revenue stream for merchants operating across diverse geographical regions.
Digital wallets use cases
Tokenised mobile wallet routing
Mobile retailers receive device-token payloads with cryptograms, token requestor identifiers and wallet-specific metadata that different acquirers may interpret unevenly. Cardflo normalises these fields and applies multi-acquirer routing so eligible transactions reach compatible acquirer partners without exposing the underlying payment credential.
Wallet token lifecycle changes
Publishers and app operators must handle token suspension, device replacement and credential reprovisioning without treating every wallet token as a conventional PAN. Cardflo preserves token status and lifecycle indicators through the gateway workflow, while acquirer partners submit the correct token data for authorisation.
Mixed wallet settlement files
Finance teams reconciling several wallet types face settlement reports where token references, gateway transaction IDs, fees and acquirer funding dates use different formats. Cardflo consolidates transaction and settlement records through one reporting layer, helping teams match authorised wallet payments, refunds and funding entries.
Wallet refunds after fulfilment
Retailers issuing refunds after dispatch need the original tokenised transaction reference retained even when the customer has removed the wallet credential or changed devices. Cardflo links refunds to the original gateway record and routes them through the relevant acquirer partner, preserving reconciliation across the fulfilment cycle.
Digital wallets by the numbers
This represents a typical industry range for merchants who add digital wallets to their mobile checkout, specifically by reducing abandonment associated with manual form entry.
Industry averages suggest that biometric wallet authentication can be completed significantly faster than manual 3DS challenges, which often require SMS codes or app switching.
Merchants often observe a modest increase in authorisation success rates when switching from standard card-not-present entries to authenticated wallet transactions.
Methodology: these figures are illustrative ranges drawn from published industry data and observed merchant cohorts, not guarantees. Actual results depend on your risk profile, card mix, geography and acquiring setup, and are confirmed only in your own pricing and approval terms.
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What you get with Digital wallets
- Support for major global wallet brands and regional payment methods via a single gateway integration.
- Utilisation of network tokenisation to replace sensitive card data and reduce PCI DSS scope for merchants.
- Integrated biometric authentication protocols including fingerprint and facial recognition for secure transaction verification.
- Automatic updates for expired or replaced cards through scheme-level account updater services within the wallet.
- Streamlined mobile checkout flows that remove the necessity for manual billing and shipping address entry.
- Full compliance with Strong Customer Authentication requirements under PSD2 and upcoming PSD3 regulatory frameworks.
- Capability to process both one-off payments and recurring Merchant Initiated Transactions using stored wallet credentials.
- Detailed reporting and reconciliation for all wallet-based transactions through a consolidated merchant dashboard.
- Reduction in chargeback risk due to the secure nature of authenticated wallet payments and cryptograms.
- Support for multi-currency settlement to facilitate easier international expansion and cross-border commerce strategies.
A short scoping call, then a written plan for your MIDs.
Questions about Digital wallets
How does digital wallet tokenisation differ from standard gateway tokenisation?
Standard gateway tokenisation involves the PSP replacing card data with a token for their specific system. Digital wallet tokenisation typically uses network tokens provided directly by the card schemes.
These network tokens are shared between the issuer, the scheme, and the wallet provider.
Because they are managed at the scheme level, they can be updated automatically if a card is lost or expires, ensuring the token remains valid without the merchant needing to request new details from the customer.
How can merchants present multiple digital wallets through one checkout integration?
Cardflo’s orchestration layer exposes eligible digital wallets through a single gateway integration, while checkout logic controls which options appear by device, currency, market and transaction context. Payment architects can add or remove supported wallet types without rebuilding the wider payment flow.
Each transaction retains a consistent reference across gateway events, acquirer partner responses and reporting, helping technical and finance teams analyse wallet performance without maintaining separate integrations.
What impact do digital wallets have on merchant service charges and interchange fees?
Generally, the interchange fees for digital wallet transactions are consistent with those of the underlying card used within the wallet. However, merchants should be aware that some wallet providers or payment methods may have different fee structures or additional scheme fees.
Because wallets typically facilitate secure, authenticated transactions, they can help minimise the costs associated with fraud and chargeback management, which indirectly affects the total cost of acceptance.
How are digital wallet transactions reconciled across currencies and providers?
Cardflo assigns consistent transaction references and normalises wallet, currency, authorisation, capture, refund and settlement data within the orchestration layer. Finance teams can match gateway events with reports from the relevant acquirer partner, without disturbing the wallet type and original transaction currency as reporting dimensions.
Where settlement currency differs, reconciliation records can distinguish the shopper amount, processed amount, fees supplied in partner reporting and net settlement value.
How do digital wallets handle disputes and chargebacks?
The dispute process for a digital wallet transaction follows the standard card scheme rules for the underlying card. If a customer initiates a chargeback, the merchant will receive a notification through their acquirer or PSP.
Because wallet transactions often involve biometric authentication, defending against 'friendly fraud' may be more effective, as the merchant can provide evidence that the transaction was authorised by the legitimate user through a secure method.
Can a merchant accept digital wallets without a mobile app?
Absolutely. Digital wallets are widely supported on mobile browsers and desktop environments via web-based payment APIs.
When a customer checkouts on a website, the browser can invoke the digital wallet, allowing the user to authorise the payment on their mobile device or laptop.
This cross-device functionality ensures that the benefits of wallet payments are not limited to native applications but extend across all digital commerce channels.
What is required to integrate digital wallets into an existing checkout flow?
Integration requires a gateway or PSP that supports the specific wallet protocols. This involves adding the wallet's JavaScript library or SDK to the checkout page, mapping the wallet's response to the gateway’s API, and ensuring that the backend can handle the tokenised payment data.
Many modern payment orchestrators offer a single API that encompasses multiple wallets, simplifying the technical requirement to maintain separate integrations for each provider.
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