With the growth of financial technology, there is limited research on the relevance of digital wallets in a cashless economy. This quantitative research, based on a survey study of 240 respondents from the banking and finance industry from Latvia, Lithuania, Georgia, the Netherlands, and the USA, explores the growth trajectory, consumer impact, and emerging challenges connected with digital wallets during the AI-driven era. The research underlines the increasing preference for digital payment methods over traditional cash due to their convenience, speed, and enhanced security, enabling seamless transactions through smartphones, smartwatches, or any other smart gadget. Despite these advancements, the research reveals significant challenges, including cybersecurity risks, data privacy concerns, and the digital divide that limits accessibility for specific populations. The research results thoroughly analyze the growing digital wallet landscape with consumer behavior, adoption patterns, and the underlying factors. With insights from the banking and finance industry, this research contributes to understanding the comprehensive implications of digital wallets for financial inclusion and economic transformation. It also highlights the significance of managing emerging challenges to ensure unbiased, safe, and secure adoption in the cashless economy of the AI era.