What is a mobile wallet?

It's more secure than a physical wallet - encryption, tokenization and biometric authentication mean sensitive data is protected even if a device is lost or stolen. It also offers extra features beyond payments, including transaction history tracking, loyalty card storage, automated expense categorisation and instant payment notifications.

Mobile wallet examples include well-known global solutions like Apple Pay and Google Pay, but local alternatives such as Twint (Switzerland) and Wero (Germany) have millions of users too.

Globally, mobile wallets are used by over 4 billion people (53% of the population). But usage varies a lot within the DACH region. Switzerland leads the group, with an adoption rate of 83% (higher than the 72% EU average). Germany follows at 60%, and just 18% of people in Austria used a mobile wallet in 2024.

Research shows that 32% of Europeans now plan to rely exclusively on mobile wallets. And with projections suggesting that mobile app revenue in DACH will exceed $20.6 billion by 2027, banks that embrace this technology will be well positioned to secure valuable market share as payment preferences evolve.

Mobile wallets operate through secure digital infrastructure that protects sensitive payment information. When a customer adds a card to their mobile wallet, the actual card details aren’t stored on the device. Instead, the system creates a unique token (a virtual account number) that represents the card - a process called tokenization.

Mobile wallet payments at Point of Sale (POS) are triggered using one of these technologies:

• Near Field Communication (NFC): Allows contactless payments by tapping a smartphone against a compatible terminal
• QR codes: Enables payments through scanning codes displayed by merchants

The transaction process then follows these steps:

1. The mobile wallet uses the token and a one-time security code for the communication through the payment terminal or with the online merchant
2. The merchant uses this information in the communication with the payment processor
3. The processor replaces the token with actual card details before sending the transaction to the bank
4. The bank verifies and approves the transaction

In the EU, Open Banking infrastructure enables mobile wallet payments using standardised APIs (Application Programming Interfaces) which ensures secure communication between banks.

Mobile wallets protect users, merchants and banks using a range of security measures:

• Tokenization: Replaces sensitive card information with unique identifiers
• Biometric authentication: Requires fingerprint or facial recognition before transactions
• Device binding: Links wallet access to specific registered devices
• Remote lock capabilities: Allows users to disable wallet access if devices are lost

To offer mobile wallets in Germany and Austria, DACH banks must follow PSD2 rules, which include using Strong Customer Authentication when customers add their cards. While Switzerland sits outside of the EU, Swiss banks also generally follow similar standards to ensure they’re able to transact with banks in other European countries.

While PSD2 (and soon PSD3) requirements may add some complexity to the development of a mobile wallet, it also results in a better customer experience (faster and more secure transactions) which ultimately improves the bank-customer relationship.

Much has been said about the gradual consumer shift away from using cash. In Europe, the share of payments made by cash has been steadily shrinking for many years. In 2019, 74% of day-to-day items were paid for in cash compared to 53% in 2024. While cash may not vanish entirely for regulatory reasons, its use is steadily approaching zero - it’s estimated that Finland will become the first European country to become ‘cashless’ as soon as 2029.

Chart showing cash preference in Austria, Switzerland, Germany, France, Belgium and Finland.

A unique consideration for the DACH region is the strong cultural preference for cash. Austria leads the group, with 38% of consumers preferring to pay in cash in 2024. In Switzerland, cash is preferred by 30% of consumers and in Germany it’s preferred by 28%. For comparison, 15% prefer cash in France, 15% in Belgium and 10% in Finland.

Reasons for the change include:

• Growing comfort with digital payment technology, particularly since the pandemic accelerated adoption
• The convenience of not having to visit ATMs or carry physical cash
• Improved security features that make mobile payments safer than cash

As the share of cash payments drops across Europe, DACH banks should be ready to accommodate and support consumers with mobile wallets as they transition to mobile payments.

A mobile wallet can be integrated within a mobile banking app in one of two ways: building it in-house or using a pre-built solution.

Challenges that banks can face when integrating mobile wallets include:

• Legacy system compatibility: Integrating modern wallet functionality with older banking infrastructure
• Regulatory compliance: Navigating complex requirements across different DACH countries
• Security implementation: Balancing robust security with a streamlined user experience

The most successful implementations focus on customer experience while ensuring that backend systems can efficiently handle the complex authentication and transaction processes required.

G+D Netcetera’s Mobile Wallet solution is a ready-made, fully brandable digital wallet for banks. It combines payment card management, contactless payments and many other financial services in one secure, customisable mobile app (available for both iOS and Android).

Key features include:

• Rapid deployment: The white-label approach enables fast time-to-market, with integration taking as little as 6 months
• Flexible configuration: The modular design lets banks select the exact features they need
• Customisation options: Banks can fully brand the solution while maintaining a consistent user experience
• Regulatory compliance: Built-in support for PSD2 requirements including Strong Customer Authentication
• DACH market expertise: Over 25 years of experience in the region provides deep local knowledge
   

Want to learn how G+D Netcetera can help your bank integrate a mobile wallet for the growing number of DACH users? Get in touch with our experts.