Digital Wallets Vs. Payment Processors Vs. Payment Gateways

by Chester C.

It’s no secret that the e-commerce sector is experiencing phenomenal growth levels, especially in the wake of the COVID-19 pandemic that has forced several businesses to go online to survive. Concurrently, an increasingly established e-commerce sector leads to the overall digitization of service industry processes. The truth is that sometimes it can be hard to set up an e-commerce business, especially regarding payment processing options such as a wallet kit. Digital wallet kits (e-wallets), payment processors, and payment gateways can be confusing concepts at first, but with a little insight, it becomes easy to select the right option for your growing online business. Also, it is important to understand that they are all related to online payments, and can even be used interchangeably. Let’s focus on the differences between digital wallets, payment processors, and payment gateways.

Understanding digital wallets, payment processors, and payment gateways

Digital wallets

Digital wallets are a direct equivalent of the physical wallets that you can carry. These are usually electronic devices and online services that users can utilize in making secure and reliable online transactions. Customers can efficiently store their bank information and card details in digital wallets, and choose to top up their wallet accounts and then use the funds to make payments for online purchases.

In addition to this, you can make use of digital wallets to authenticate your online presence. This is because digital wallets are capable of storing your entire user information, including personal details, credentials, and transaction history. It is also possible to use digital wallets alongside numerous other mobile payment solutions currently in the market.

Digital wallets developed using wallet kits such as Huawei’s, and which are highly popular, include Samsung Pay, PayPal, Android Pay, and Apple Pay.

Payment processors

In the fast-paced world of modern technology, payment processors provide all the payment processing capability to users by acting as middlemen between e-commerce stores and banks or credit card users. In fact, payment processors can work as both payment gateways and as payment intermediates. A payment processor that does payment mediation provides money collection and technical payment processing capabilities to its users. At this level of operations, payment processors are responsible for a majority of the contracts with banks and card acquirers and for settling collected funds and mitigating the role of bureaucratic merchants.

Payment gateways

In essence, payment gateways work in the same way as PoS machines. They are the requisite bridges between your website and the banks or card acquirers. Payment gateways differ from digital wallets because they offer technical solutions (read “programs”) that enable card payments.

Points of note

· Digital wallets developed using wallet kits are increasingly designed to be stored on the server-side as opposed to the client-side due to increased efficiency and security only available on the server-side.

· Digital wallets are actually payment methods, and facilitate transactions between sellers and buyers in online platforms by storing billing address, shipping address, and payment methods.


A reliable and efficient digital wallet kit can be leveraged to create enhanced digital wallets. As a consumer, you can choose to pay via a digital wallet, but your amazing e-commerce website still requires a payment processor or gateway to facilitate transactions.


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