How do digital wallets work in modern banking systems?.

Digital wallets work by storing users' payment information securely, enabling fast transactions through smartphones or other devices. They utilize encryption and tokenization for security, allowing users to make payments without sharing sensitive card details directly with merchants. Transactions can include in-store payments using Near Field Communication (NFC), online purchases, and peer-to-peer transfers. Popular digital wallets include PayPal, Apple Pay, and Google Pay, which offer user-friendly interfaces and integration with various banking services.