Digital wallets are crucial in the payments ecosystem, especially for e-commerce and small business transactions, which have experienced significant growth. These wallets also innovate and support new payment experiences within the connected vehicle ecosystem.

According to a well-known payment industry framework, the types of digital wallets include:

• Pass-through digital wallets
• Stored value digital wallets
• Staged digital wallet operators

Pass-through digital wallets are compatible with retailers that accept Visa payment credentials. These wallets do not store funds or facilitate the transfer of funds between the customer and the retailer. This solution is mobile phone-based, utilizing a tokenized, digital version of the customer’s physical Visa card. This digital version is transferred directly to the retailer, either in-store via Near Field Communication (NFC) tap-to-pay transactions or online.

Stored value digital wallets provide customers with a separate “account” that they pre-load using their Visa payment credentials, allowing them to complete transactions through the wallet. These wallets:

1. Can either or both:
   • Support a proprietary multi-retailer network and/or person-to-person (P2P) functionality, where payments are accepted via the digital wallet operator (DWO) brand on the DWO’s platform.
   • Assign a general-purpose payment network product to the “front” of the wallet’s account, enabling customers to use the wallet’s stored funds anywhere Visa or the general-purpose payment network is accepted.
2. May allow both manual/ad-hoc and automated reloads of the wallet’s balance. Automated reloads can be:
   • Set at a regular frequency.
   • Triggered by a balance threshold based on customer usage.

Staged digital wallet operators (SDWOs) manage proprietary multi-retailer networks where payments are accepted under the digital wallet operator (DWO) brand. These platforms may also support person-to-person (P2P) transactions between users.

These digital wallets provide customers with a separate account (referred to as the front of the wallet account), which is used to initiate back-to-back purchase and funding transactions in two stages. This setup allows customers to complete purchases with retailers in the SDWO’s network automatically, regardless of the available balance in the digital wallet account. Even if the wallet is pre-loaded with funds, it is classified as a staged digital wallet if it can perform “back-to-back” transactions. Additionally, each SDWO:

• Must have a merchant contract with every retailer that accepts the digital wallet and ensure the retailer’s details (e.g., name, Merchant Category Code [MCC]) are included in all transactions.
• Is not permitted to assign a general-purpose payment network product to the front of the wallet’s account if Visa payment credentials are also used to fund the wallet.