What does “Wallet” mean to you?

Celine Wee
3 min readOct 15, 2022

Say “Wallet” to different audiences, and it means something different to each. In this post I cover:

  1. Overview of Three “Wallet Types”
  2. Some Quick Observations

In other posts, I will deep dive the similarities and differences between the three “Wallet Types”.

1/ Overview of Three “Wallet Types”

  1. Digital Wallet: Applications that enable consumers to make contactless payments with their smart phones and other mobile devices, using digital representation of their cards. For example, Apple Pay, Google Pay.
  2. Electronic Wallet/Mobile Wallet: Applications that function as a store of value for fiat funds, and enables consumers to make digital payments (peer to peer, consumer to business). Sometimes, the app is a full stack platform for financial services (lending, trading etc). Examples are Alipay, WeChat Pay, Gcash, Maya, Gopay, Linepay, Paypal (non exhaustive list).
  3. Self Custodial Wallet: Say “Wallet” to a Web3 audience and they might think — CB Wallet, Metamask, Trust Wallet. For self custodial (or “non custodial”) wallets — the wallet user owns the keys (hence “custodies”) and their own crypto assets.
My mental model for the Three “Wallet Types”

2/ Some Quick Observations

Observation #1: Geography influences user familiarity to “digital wallets” (type 1) vs “e-wallets/mobile wallets” (type 2).

E-wallets (type 2) aren’t understood as well in banked/card dominant markets e.g., US, AU, UK. That’s understandable given that e-wallets have less of use case there.

  • In banked/card dominant markets, “digital wallets” (type 1) are more prevalent: people have bank accounts, cards linked to bank accounts, and are accustomed to using cards for contactless payments (online and offline).
  • Digital wallets are a (relatively) easy to adopt next step from using cards — using smartphones/devices to link Apple Pay/Google Pay to debit/credit cards. Hence, their phones/devices carry the digital representations of their card stored within their “digital wallet”.

(Update: I’ve done a deep dive on type 2 “electronic/mobile” here as a follow up post.)

Photo by Clay Banks on Unsplash. Example of a Google Pay contactless transaction (type 1 — digital wallet)

Observation #2: “Wallet” services are also offered by banks and trading solutions.

Here are two other types of “Wallet” services:

  • “Bank wallet”: Banks sometimes have mobile wallets which enable easy account to account transfers. In some countries, you can send money instantly to anyone (regardless of their bank, thanks to national payment networks (e.g., Bank A consumer send to Bank B consumer, without paying fees). [1].
  • Fiat wallet”: Consumers top up their fiat wallet (linked to a specific exchange/trading platform) and then use it to trade stocks/crypto. Example: Interactive Brokers, Coinbase.

Observation #3: Self Custodial Wallets are not yet mainstream.

Self custodial wallets might feel mainstream to some audiences, but they are not yet mainstream. A litmus test — can you pay for food and groceries with your self custodial wallet? Would you use it to send money to a friend, or are you using Venmo/Cash/local instant payment networks? Or to send money overseas? [2] There’s some way to go for ease of use— this Coin Telegraph article sums it up:

Noncustodial wallets are more secure than custodial wallets, but it may take time for everyday, nontechnical users to get used to them.

Conclusion

The thread across all three wallet types — (1) digital wallet (2) e-wallet/mobile wallet (3) self custodial wallet — is that all are technology solutions which move physical cash into the the digital world. Looking forward to seeing how things unfold.

[1] This might feel unfamiliar for US based readers. The best analogy I can think of is — imagine Venmo + Zelle being centralized so that all banks within one country adopt the same standards and enable free, convenient and fast instant payments (C2B, B2B) across different banks. It surprises me that one has to pay 1.5% (Square Cash) for instant payment transfers, and that ACH costs $3.

[2] I’ve written about how cross border payments are possible through self custodial wallets. However there are still significant barriers — costs, predictability, and ease of use.

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Celine Wee

Musings are my own: a collection of Go To Market, Payments, Biz Ops learnings across Stripe, Coinbase, Twitter. I also write @celinewee.substack.com