What is a Digital Wallet?

A digital wallet is a software-based platform that securely stores users’ payment information and enables seamless electronic transactions across multiple devices.

These digital tools function as electronic counterparts to traditional wallets. Users can store credit card details, debit card information, and bank account data within the secure platform. The wallet encrypts this sensitive information and protects it through various security measures like biometric authentication.

Digital wallets serve multiple transaction purposes beyond simple purchases. Users can complete online shopping, send peer-to-peer payments to friends or colleagues, and receive direct deposits from employers. Many platforms also support bill payments and money transfers between different financial institutions.

The technology has gained significant traction in global payroll and cross-border employment scenarios. International businesses appreciate the speed and accessibility that digital wallets provide for paying remote workers. Employees in different countries can receive payments directly to their preferred wallet platform without traditional banking delays.

Modern workforce management increasingly relies on these flexible payment solutions. Companies can optimize their payroll processes and offer employees greater control over how they receive and manage their earnings, whether it’s accepting payment via cryptocurrency or a specific country’s legal tender.

Types of digital wallets

Digital wallets come in several distinct formats that serve different business and personal needs. Each type offers unique advantages for employers managing global payroll and employees receiving compensation across borders.

Mobile wallets. Apps like Apple Pay, Google Pay, and Samsung Wallet connect directly to smartphones or wearable devices. Mobile wallets are linked to existing bank accounts or credit cards and enable contactless payments through near-field communication technology.
Online wallets. Web-based platforms, such as PayPal, Skrill, and Wise, allow users to store funds and manage multiple payment methods directly through internet browsers. These services often support international money transfers and currency conversions for cross-border transactions.
Cryptocurrency wallets. Software- or hardware-based systems store digital assets like Bitcoin, Ethereum, and other cryptocurrencies. Crypto wallets provide access to decentralized payment networks, but they require careful consideration of regulatory compliance in various jurisdictions.
Embedded wallets. These are payment systems integrated directly into other platforms such as eCommerce sites, payroll services, or marketplace applications. Embedded wallets streamline user experience by eliminating the need to switch between different payment platforms during transactions.

Each wallet type presents distinct compliance considerations for international employers. Companies must navigate varying regulations across countries when implementing digital wallet options for employee compensation.

“The wallets work by enabling job candidates to consolidate and pre-verify credentials, such as university degrees, employment histories, licenses, certifications, talent assessments, badges, or work samples in one immutable digital block, or wallet,” said Dave Zielinski, Owner of Skiwood Communications, at SHRM. “Many, but not all, digital wallets are based on blockchain technology, a digital ledger of transactions maintained on computer networks that makes it difficult for the information to be altered or hacked.”

Digital wallets and global payroll

Employers of Record (EORs) like Velocity Global are transforming international compensation by enabling direct deposits into employees’ preferred digital wallets. This approach bypasses traditional banking systems, providing faster access to earnings for global teams. Companies can now pay workers across multiple countries without relying on slow and expensive wire transfers that often delay compensation.

Digital wallet integration proves especially valuable for the estimated 1.7 billion unbanked adults worldwide who rely on digital financial tools over traditional bank accounts. Professionals in regions with limited banking infrastructure can receive payments directly without needing a conventional bank account. This accessibility removes significant barriers that previously prevented talented professionals from participating in the global workforce.

The shift toward digital wallet payroll offers substantial operational benefits for global employers. Companies experience faster remittance times and lower transaction costs compared to traditional banking methods. EORs can streamline cross-border payments while ensuring payroll compliance with local regulations across different jurisdictions.

Financial inclusion becomes a strategic advantage when businesses embrace digital wallet solutions for global teams. Employees gain greater flexibility in how they receive their earnings, while companies can attract talent from previously underserved markets. This technology bridges geographical gaps and creates more equitable access to international employment opportunities.

Digital wallets and cryptocurrency

Many modern digital wallets integrate cryptocurrency capabilities that extend beyond traditional payment processing. Platforms like Coinbase Wallet, PayPal, and Best Wallet offer built-in exchanges that allow users to buy, sell, and convert between fiat currencies and digital assets. These integrated features eliminate the need for separate crypto exchange accounts and streamline the conversion process.

Third-party integrations further expand cryptocurrency access within digital wallet ecosystems. Services like BitPay send and specialized crypto payroll platforms connect with existing wallets to facilitate seamless fiat-to-crypto conversions. Organizations can pay employees in crypto, and employees can automatically convert portions into their preferred digital assets through their chosen wallet platform.

While most employers continue paying wages in local fiat currencies, payees gain flexibility to manage their earnings across both traditional and digital financial systems. This approach allows companies to offer crypto-adjacent benefits without directly handling digital asset transactions. Workers can allocate portions of their compensation to cryptocurrency investments through their personal wallet preferences.

Employers must navigate complex compliance requirements when integrating any cryptocurrency into their payroll systems. International financial regulations vary significantly across jurisdictions regarding cryptocurrency use in employment contexts. Companies should consult legal and tax professionals before implementing any programs that facilitate crypto conversions, even through third-party wallet services.

Why digital wallets matter for employers

Digital wallets offer a strategic advantage for modern employers seeking flexible and efficient payment solutions for their global workforce. Increasingly, companies are discovering how these platforms can transform payroll operations while also enhancing employee satisfaction and operational efficiency.

Payroll flexibility. Digital wallets enable employers to pay globally distributed teams without navigating complex traditional banking requirements across multiple countries. Companies can support diverse payment preferences and accommodate employees in regions where conventional banking access remains limited.
Cost and speed advantages. Digital wallet transactions typically offer lower fees and faster processing times compared to international wire transfers. Businesses can achieve significant cost savings on transaction fees while ensuring employees receive payments promptly, especially for cross-border transactions.
Enhanced employee experience. Professionals gain greater convenience and financial autonomy through digital wallet access, with 70% of employees considering earned wage access an important benefit. Companies offering these solutions see productivity increases of approximately 11% and reductions in attrition rates of up to 16%.
Market adaptability. Employers can align with employee preferences in emerging digital economies, where mobile-first financial tools dominate traditional banking. This flexibility helps companies attract and retain talent in markets with varying financial infrastructure development.
Operational scalability. Digital wallet integration proves especially valuable for startups and enterprises managing remote-first or borderless teams. The technology streamlines payroll processes while maintaining compliance across multiple jurisdictions, supporting rapid business growth and international expansion.

“Digital wallets save recruiters time by giving them the ability to review pre-verified, consolidated candidate credentials in one place,” says Zielinski. “This translates to a considerable advantage in a job market where applicants remain scarce for many roles and the ability to move quickly to hire talent before competitors can is paramount,” he adds.

Provide flexible compensation with Velocity Global

At Velocity Global, our global EOR solution streamlines global payroll by enabling direct deposits to employees’ digital wallets while maintaining full compliance with local regulations. This approach eliminates traditional banking barriers and provides professionals with flexible payment options that can be seamlessly converted to their preferred financial instruments, including crypto. By combining comprehensive EOR services with digital wallet integration, we empower employers to offer modern, inclusive payment solutions that attract global talent while mitigating compliance risks in an increasingly digital workforce landscape. Get in touch to learn more.

This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.