The way we use money is changing. Most people use credit cards and debit cards instead of actual dollars and cents when buying items or services, and companies like PayPal, Venmo and Zelle let you transfer money from your account to the accounts of your friends and family members.
Another change is coming, though. Digital wallets, also called mobile wallets or e-wallets, are slowly but steadily gaining in popularity as more and more people discover how easy, convenient and secure they are.
What is a Digital Wallet?
A digital wallet is a secure app on your smartphone that stores your debit and credit card payment information. It then lets you use your smartphone to make purchases using that information.
When you want to make a payment, you’ll first need to make sure the card reader at the store will accept digital wallet payments, the same way you’d need to make sure the store accepts certain credit cards. Then simply hold your smartphone in front of the card reader, confirm your purchase and you’re good to go.
Most smartphones have a digital wallet app pre-installed, so the type of digital wallet you use will depend on the kind of smartphone you have. Samsung users get access to Samsung Pay, Apple users get Apple Pay, and Android users get the Google Pay app. In addition, many merchants, like Starbucks and Target, have their own digital wallet apps that you may be able to sync up with Apple Pay, Samsung Pay or Google Pay.
What are the Advantages of Digital Wallets?
A digital wallet offers several advantages over using cash, or physical debit cards or credit cards. The obvious advantage is convenience. You don’t have to dig around in your wallet for your credit card, debit card, membership card, or even plane tickets. Instead, you simply open up your digital wallet and select which card you want to use.
Even better, most digital wallet apps let you organize all your credit cards and membership cards. No more searching through your wallet for your loyalty card, then searching again for your credit card.
A digital wallet may also let you bypass online forms. If you’ve ever wanted to buy something online with your smartphone, you know all about the tedium of having to fill out your name, address, city, state, ZIP code, shipping address (if not the same as your billing address), debit or credit card number, expiration date and finally your card’s three-digit security code. If you have a digital wallet, though, you can fill that information in just by tapping the right space on your touchscreen.
Digital wallets are also cleaner than cash, debit card or credit card transactions. You don’t have to enter a PIN number into a keypad or slide a card into a chip reader or through a magnetic reader. You just have to hold it close to the reader itself. This helps reduce your chances of getting contaminated and becoming sick when shopping in public spaces..
Finally, a digital wallet may give you access to bonuses and discounts. If that weren’t nice enough, you might even be able to stack the bonuses your digital wallet offers with the bonuses your credit card offers by itself.
Are Digital Wallets Secure?
One of the big reasons people are hesitant to use digital wallets is because they’re worried about how secure they are. If they put their debit card and credit card information into a digital wallet, are they just volunteering to have their identity stolen?
In fact, digital wallets are actually more secure than using credit cards and debit cards directly. When you load your cards into a digital wallet, the app encrypts that information, making it difficult for hackers to compromise when you’re paying for an item. As an added bonus, this can even help protect your payment information if hackers breach a company you have done business with.
You should know, however, that anyone who can access your smartphone will be able to use your digital wallet. So you should make sure you have a strong numerical password, and enable fingerprint ID or facial recognition ID if your smartphone has them.
Unlock the Benefits of Using First Alliance Credit Union Credit and Debit Cards With a Digital Wallet
When you upload your debit and credit cards to a digital wallet, you’re not only making your transactions easier and more convenient—you’re also making them more secure.
If you want to try out your smartphone’s digital wallet, you’ll be happy to know that First Alliance Credit Union’s debit and credit cards are compatible with the big digital wallet services, including Apple Pay, Samsung Pay and Google Pay. In addition, you can also download the First Alliance mobile app and use the MyCards feature to let you limit what type of businesses your card can be used at and even limit the dollar amount of purchases on your cards. You can also define the area in which your card can be used.
Want more information? Listen to our Good Money Moves podcast episode where we talk about how to use credit cards responsibly, whether you're using them in your digital wallet or not.