What is a digital wallet?

• A. An app that stores physical cash
• B. A device that stores coins
• C. Stores your debit or credit cards on your smartphone
• D. A hardware only wallet

Answer: (C)

A digital wallet is an app on your smartphone that securely stores your debit or credit card information so you can pay electronically. It uses encryption and tokenization so the real card numbers aren’t shared with merchants, and you can authorize payments with biometrics or a passcode. Payments can be made by tapping your phone (NFC) or online, without needing the physical card. It’s software-based and depends on your device, not a hardware-only wallet or something that holds physical cash or coins. That’s why describing it as storing your debit or credit cards on your smartphone is the best fit.