What’s a Digital Wallet?

Wherever we go nowadays, we carry a smartphone with us. There is a big chance some of us also have a tablet, smartwatch, or laptop in tow. We can perform our everyday tasks with just a few taps on the screen at any given moment of the day. We are even able to make purchases without cash or credit cards, thanks to digital wallets. So, what’s a digital wallet, and why should you use one?

Definition of a Digital Wallet

Digital wallets are digital models of your credit and debit cards. They are stored in wallet apps on your smartphone. Some of the most famous examples are Apple Pay, Samsung Pay, and Google Pay.
These wallets store not just credit card data but loyalty cards and event tickets as well.

And let’s clear up the ‘digital wallet’ and ‘mobile wallet’ dilemma right off the bat. People often get confused by the two and use the terms interchangeably. In reality, ‘digital wallet’ is an umbrella term that encompasses mobile wallets.

Your laptop, desktop computer, or phone can all have digital wallet software installed on them. On the other hand, mobile wallets are exclusively found on mobile phones and smartwatches. These come in handy for contactless purchases (something quite popular in these Covid times) at physical checkouts of stores.

How to Choose a Digital Wallet

In the introduction, we have mentioned some big names – Apple, Samsung, and Google. They all have their digital wallet software. Which one you will have will come down to the phone you own. You can’t use Samsung Pay on an iPhone, and vice versa.

So by choosing a brand of phone, you’ve also picked out your digital wallet. There are some exceptions, such as PayPal, whose application can be found and downloaded both through Apple’s store and Google Play.

Note that your use of the wallet will also be somewhat limited. Not all merchants adopted payments via digital wallets, so you have to carry a credit or debit card as a backup payment method.

Why Should You Use Digital Wallets?

For starters, research shows that digital wallets will be on the rise at least until 2027. Seeing how many customers and merchants prefer contactless payment comes as no surprise – not only is it quicker, but it is also more hygienic in these pandemic times.

If you are out of cash or don’t have your credit card with you, you can still conveniently make your payment – you can use digital wallets at most stores, gas stations, ATMs, and basically, anywhere you see the contactless symbol.

There are different ways they work, but you mostly pay by bringing your device up to a terminal with the said contactless symbol (four curved lines). Sometimes you will be required to put in your passcode or provide your fingerprint to finish the transaction.

And if you are an avid online shopper, you don’t have to go through the hassle of entering your credit card information. Digital wallets fill in your data automatically and in a bat of an eye.

And as we have mentioned, not only can you store loyalty cards on them, but you can store coupons, plane tickets, memberships, and more. They are also one of the primary interfaces for Bitcoins and other major cryptocurrencies.

One of the cons, for the time being, is the fact that they may incur fees for some services, like credit card transfers to peers or payments for instant money transfers.

Is My Payment Information Safe?

You are probably asking yourself how secure is your data on your digital wallet. Well, your card number is not stored on your device, so merchants can’t see it.

The app gives each credit and debit card a unique 16-digit number. That number, called a ‘token,’ refers only to the digital wallet and the smartphone you use. Transactions are thus tokenized and uniquely encrypted, making them very secure.

Moreover, no one can use your wallet for payment without authentication. So, your data is secure, even if your phone gets lost or stolen. You can secure yourself additionally with apps that let you remotely lock your phone or erase your data.

Consult a Financial Expert

Even though digital wallets are considered safe, you can still be a target of a cyberattack. Avoid a malware attack that could allow criminals to access information stored on your device. If you are not careful enough, frauds could steal your information and seriously damage your credit score. White, Jacobs and Associates offers a free consultation for those thinking about opting for a digital wallet. Book a meeting with their credit specialists today and take a further step into the digital age.