An e-wallet, or digital wallet, is an account that keeps money in electronic form. You pay, send and receive it from a phone or a browser. You need no plastic card in hand, and you don’t have to visit a branch.
The word covers very different things, though. A payment account with an IBAN is a wallet. So is the Apple Pay button on your phone, and so is a device for Bitcoin. They work differently, so the choice depends on what you actually plan to do with the money. Our own SharPay wallet, for example, holds euro and crypto on one balance.
Contents
- What an e-wallet is
- How an e-wallet works
- Types of e-wallets
- Custodial and non-custodial wallets
- Hot and cold crypto wallets
- Is an e-wallet safe?
- Which wallet fits which task
- Opening an e-wallet in SharPay
What an e-wallet is
Money never lives inside the app. A licensed company holds the balance, and the wallet is your window into it. That’s why a wallet is only as reliable as the institution behind it, whatever the interface looks like.
Compared with a classic bank account, three things differ in practice. You open a wallet remotely in minutes rather than days. It usually holds several currencies, and often crypto, side by side. And it doesn’t lend, so there’s no overdraft: you spend only what is on the balance.
A good wallet still shares one feature with a bank: an IBAN of your own. With it, an employer or a client pays you by ordinary transfer. That is how a personal IBAN account works in SharPay.
How an e-wallet works
The cycle is the same in almost every service:
- Top up. Money arrives by bank transfer, from a card or from another user.
- Hold. The balance sits in one or several currencies, which saves you conversions.
- Pay. Directly from the balance, with a card issued to it, or with your phone over NFC.
- Send. Inside the service, transfers are usually instant and free, while outside transfers go to an IBAN through SEPA.
- Withdraw. The money goes back to a bank account or a card. Hidden fees tend to appear exactly here.
Transfers between two users of the same wallet are the fastest part, because no bank sits in between. In fact, this is the same idea behind P2P payments between friends.
Types of e-wallets
Most people mix up three kinds of wallets, so it helps to separate them first.
Payment wallets with a balance
This is the classic e-wallet. It is an account with its own balance, usually multi-currency, often with an IBAN. You top it up, keep money there and pay from it. A card can be issued to the balance, and it works in shops like any bank card.
Mobile wallets on your phone
Apple Pay and Google Pay hold no money of their own. Instead, they store a digital copy of a card you already have and pay with it over NFC. So they are a payment method rather than an account. Behind them you still need a card, such as a SharPay payment card on your phone.
Crypto wallets
A crypto wallet stores keys, not money. Coins stay on the blockchain, while the key proves they are yours and lets you move them. Crypto wallets differ in two ways: who holds that key, and whether the wallet is online.
Custodial and non-custodial wallets
In a custodial wallet, the provider keeps the keys for you. You log in with a password and two-factor code. If you forget the password, support can restore access. Because the provider runs the wallet for you, it can also link your coins to cards, exchange and withdrawals.
In a non-custodial wallet, sometimes called self-custody, only you hold the key. Usually it comes as a recovery phrase of 12 or 24 words. Nobody can block your funds, but nobody can return them either if the phrase is lost.
Neither model is better in general. A custodial wallet suits people who spend crypto and want it to behave like money. Meanwhile, a non-custodial one suits people who hold coins for years and don’t want to depend on a company. Our guide on how to create a crypto wallet walks through both setups step by step.
Hot and cold crypto wallets
A hot wallet is connected to the internet. Apps, browser extensions and exchange accounts are hot wallets. They are convenient for daily payments, although they are also the ones attackers target.
A cold wallet keeps the key offline. Most often it is a hardware device, such as a USB-style gadget or an NFC card. It signs transactions while the key never touches the internet. A paper wallet with a printed key is also cold, though it is easy to damage or lose.
In practice, many people use both. Our guide to the cold wallet explains how to choose one and set it up. Savings stay in cold storage, while a small amount sits in a hot wallet for spending.
Is an e-wallet safe?
For regular money, safety comes from regulation. The provider must be licensed, keep client funds separately and check who opens accounts. On your side, protection is a strong password, two-factor login and a locked phone. A stolen phone alone gives a thief nothing, since the app asks for a PIN or biometrics.
Crypto adds one more risk: the irreversible transfer. A payment sent to a wrong address or a scammer cannot be cancelled. Therefore, check the network and the address before every transfer. And never share a recovery phrase with anyone, including “support”.
Which wallet fits which task
Start from the task, not from the brand:
- Paying and getting paid in euro. Choose a payment wallet with an IBAN and a card.
- Paying from the phone. Add that card to Apple Pay or Google Pay.
- Spending crypto like money. Choose a custodial wallet with exchange and card withdrawal, for instance a virtual card you can top up with crypto.
- Holding crypto for years. Choose a cold, non-custodial wallet and keep the recovery data offline.
Opening an e-wallet in SharPay
Registration takes a few minutes: email, phone and a password. After that, verification asks for a passport scan, and the check usually takes 5 to 15 minutes. Then you open the products you need with the “+” button in your account.
The personal account costs 10 EUR to open and 3 EUR a month. Transfers between SharPay users are free, while an incoming or outgoing SEPA transfer costs 1 EUR + 0.35%.
The crypto side supports USDC, BTC, ETH, DAI, LTC, XRP and TUSD. USDC goes straight to a Mastercard or Visa card for 3%, with a minimum of 30 USDC. Need the money in a regular account? Our guide on how to cash out crypto shows the full route.
Running a fintech business rather than choosing a wallet for yourself? Then a white label e-wallet lets you launch one under your own brand.