Digital wallets are the future of payments, and for good reason. Using a digital or mobile wallet is more secure, more convenient, faster, and more efficient than using a physical card or paper currency.
What are digital wallets?
Digital wallets are simply digital versions of your accounts, such as credit and debit cards, that are accessed from your computer, watch, or mobile device (mobile wallets). Some of the most common digital wallets are Apple Pay®1skip to disclosure, Google Pay™2skip to disclosure, Samsung Pay3skip to disclosure, PayPal®, Venmo, and Cash App.
How do digital wallets work?
Say you want to make a mobile wallet purchase at a grocery store using your DuPage Credit Union credit card. First, add your card on your iPhone® or Android™.
If the merchant accepts mobile wallet payments, you should see an Apple Pay, Google Pay, or contactless symbol on the terminal. Even if the terminal doesn’t have these symbols, the merchant still might accept payments, so it’s best to ask.
Then, simply open your mobile wallet, select the card you want to pay with, and hold the back of your phone on the terminal. If you have an iPhone it will prompt you to confirm your purchase with Face ID®, Touch ID®, or your passcode. Your device then transmits the payment using Near Field Communication (NFC) technology.
Now that you know what digital wallets are and how they are used, here are the top 7 reasons you should be using digital wallets to make payments in-store and online:
1. Digital wallets are more secure.
With digital wallets, your credit card information is not stored on your phone. In fact, transactions are encrypted and stored in the cloud. When data is transferred to merchants to make payments, your account numbers aren’t transferred. Instead, digital wallets use a process called “tokenization” whereby a unique, one-time use “token” is sent.
But what if my phone gets stolen?
The way more concerning alternative is: What if my physical wallet gets stolen? You’d have to immediately cancel all of your cards and you’d likely lose your ID and whatever other sensitive documents you are carrying.
On the flip side, if your phone gets stolen, the thief would first have to find a way past your Fort Knox-like screen lock, which, when done right, makes your phone quite secure.
If you use Google Pay, I recommend you require authentication before you make a purchase. To do so, tap the menu icon in the top left of the app > Settings > Sending money > “Require a confirmation” or “Fingerprint.”
Even if a thief were to somehow crack all of these methods, you still have an ace in the hole with “Find My Phone” or “Lost Phone” apps which allow you to lock your phone remotely and even revert your phone to factory settings.
2. Digital wallets are unskimmable.
Credit card skimming is a method of attaching devices on gas pumps and ATMs that read the magnetic strip so that criminals can gather your card information. But these days, skimming can also happen online as cybercriminals gain access to and hide code to create fake forms on checkout pages.
When you use a digital wallet to checkout; however, because of the unique tokenization process, you never actually share your card’s information, meaning it is impossible for anyone to skim your cards.
3. You don’t have to use a public touchscreen.
Touchscreens are havens for bacteria. By using a contactless mobile wallet to pay in-store, for example, you may lessen your chance of getting sick.
4. Digital wallets allow you to be more organized.
No more fussing with your George Costanza wallet. Digital wallets can hold your credit cards, debit cards, gift cards, membership cards, coupon codes, drivers license, boarding passes, event tickets, and more!
5. You can still earn rewards with digital wallets.
Using digital wallets for your debit or credit cards will earn you rewards points or cash back just as if you were using them physically. Plus, some digital wallets like Samsung Pay allow you to earn rewards for using it as your payment method.
6. You can easily pay, split, request, and receive payments.
Digital wallets can be used for more than just shopping; they also allow you to send and receive payments to/from friends and family. With Venmo or Cash App, for example, you can request rent money from your roommate or split the restaurant tab with your friends.
7. You can pay using your smartwatch.
Apple Watch®, Samsung Galaxy Watch, Fitbit®, and many others are compatible with digital wallet apps such as Apple Pay®1skip to disclosure, Google Pay™2skip to disclosure, Samsung Pay3skip to disclosure.
COVID-19 has accelerated the use of contactless payments like digital wallets. By providing better security, contactless usage, and convenient access, digital wallets are the future of payments.
¹Apple Pay is a trademark of Apple Inc., registered in the U.S. and other countries. ²Google Pay is a trademark of Google LLC. ³Samsung Pay is only compatible with supported cards, carriers, and Samsung devices. See Samsung.com/pay for compatibility.