July 18, 2018
What to know about using a digital wallet.
What is a digital wallet?
In simple terms, a digital wallet is an electronic version of the physical wallet you carry. It stores your payment information – like credit and debit cards – in an online account. When you’re making a purchase, you can use your digital wallet to provide payment information instead of presenting your plastic credit or debit card each time.
Digital wallets are more common today, but they aren’t new. PayPal became the first digital wallet when it was introduced in 1998. Then the rise of cell phones further expanded the possibilities of digital wallets.
Can I use a digital wallet on my mobile device?
That’s where mobile wallet apps come in. Basically, if you have a digital wallet on a device, that means you have a mobile wallet. Instead of carrying around your debit or credit cards, you can add them to the mobile wallet on your smartphone or tablet and pay that way. Common mobile wallet apps include Apple Pay®, Google Pay™, Samsung Pay and others. Your device may have even come with a preloaded mobile wallet.
Follow the instructions for your specific device and app, and connect your payment information to the app to get started. Beyond credit and debit cards, you can sometimes add gift cards and even IDs as well.
How do I pay?
There’s nothing to swipe or insert at the register when you’re paying in a store with a mobile wallet. Mobile wallets allow for contactless payments, which usually involve opening your mobile wallet app and then holding your device over the payment reader. This is possible because of technology called near-field communication (NFC) that allows devices to exchange information without touching.
Why are they useful?
What’s the one thing you always have with you? You probably already rely on your phone for several tasks, from communicating with friends to checking your calendar. With a mobile wallet, you can add paying for things to the list – whether you’re in a store or shopping online. Plus, you can leave your physical credit and debit cards safe at home.
But are they safe?
With card compromises in the news recently, it’s smart to be thinking about security. Fortunately, digital and mobile wallets have features that help protect your information.
They use what’s called tokenization to assign a device account number (DAN) in place of your 16-digit account number. When you pay, the DAN is passed to the merchant instead of your actual account number. That way, if your device account number is stolen, your account is still safe. A new DAN can then be assigned to take the place of the one that was compromised.
You can even “wear” your wallet.
Now mobile wallets are often included on tech wearables like watches, fitness bands and even rings. Like the mobile wallets found on smartphones, wearables with mobile wallets have the same convenience and security. So, now when you’re finished with your morning run, you can head to your favorite smoothie shop and pay for your drink with a wave of your hand.
With a better understanding of these new payment technologies, you can determine whether a mobile or digital wallet is right for you. It’s likely that your credit or debit card is compatible with mobile wallets, but check with your card provider to make sure. Whether it’s a smartphone or watch that you’re setting up, the process is usually straightforward, so you can start leaving your cards at home in no time.
Commerce Bank offers several digital wallet and wearable options.