Perks of Using a Digital Wallet for Purchases

One of the features that comes with today’s smartphones is the ability to use your phone for payments rather than swiping your credit cards. The latest smartphones come equipped with a technology known as Near Field Communication, or NFC, which can transmit certain information when the phone is near an NFC-equipped reader. In the case of payments, your phone can securely send your payment information when it’s placed near a credit card terminal. Some smartwatches even come with the ability to act as a digital wallet.

So far, the major digital wallets are Apple Pay, Samsung Pay, and Microsoft Wallet. There are a few others that aren’t as widely used as the major three. Using the digital wallet software built into your phone is usually more secure than using a wallet app downloaded from the app store.

Convenience

Using a digital wallet can be more convenient than using a physical card. You can leave your wallet at home and simply wave your credit card over the terminal to complete your transaction. You don’t have to sift between multiple credit cards or spend time looking for the right card. Just wave your phone over the terminal the same way you’d swipe or insert your credit card. You can opt to require a PIN or fingerprint to approve each transaction for extra protection. And your phone has to be within a few inches of the reader to process the transaction, so you don’t have to worry about accidental payments.

After that, the transactions is just the same as if you’d swiped your card. The transaction is added to your credit card balance or deducted from your checking account balance depending on which type of card you used. If you used a credit card, you may earn rewards on the transaction and you’re responsible for paying your credit card balance as normal.

Security

Your phone has several security features that keep your credit card information safe. From a simple PIN or password to facial recognition or fingerprint entry, there are a variety of ways you can lock your phone so no one can unlock it but you, even if it’s lost or stolen.

Rather than sending your actual payment information from your phone to the merchant, each transaction is sent with a unique and random transaction number. Even if the retailer is breached, the hacker wouldn’t get your payment information. With the rise and severity of data breaches in the past few years, this level of security is essential for preventing fraud.

Your credit card information is heavily encrypted, so it’s extremely difficult for someone to steal your information from your wallet, even if they were able to get into your phone. Zero fraud liability offered by credit card issuers and fraud liability laws limit will either eliminate or limit your responsibility for any unauthorized charges made to your account.

Many credit card issuers can reissue your account information to your phone if your physical card is lost or stolen. This way you can continue to make transactions while you wait for a new card to come in the mail.

Not all merchants have the necessary equipment to process payments from a smartphone, so you can’t get rid of your credit card yet. But, as more consumers adopt digital wallets, merchants will have to catch up.