Digital wallets, also known as mobile wallets, have grown in popularity over the years. But the freedom to leave all of your cards at home isn’t the only benefit that users will enjoy. A digital wallet has many benefits apart from condensing physical cards and providing a seamless and secure payment option.
The top three digital wallets are Apple Pay, Google Pay, and Samsung Pay. Venmo and PayPal can also function as digital wallets, both in-store and online. A major digital wallet is usually already downloaded to your mobile device or can be downloaded for free from the App Store.
Once set up, a digital wallet could offer bonus rewards, reduced exposure to germs at checkout, and help you split payments with friends, among other options. Discover all the potential functions of your digital wallet.
1. Declutter your wallet
In addition to organizing your credit cards, a digital wallet can store other items that take up space in your physical wallet.
Condense your debit and credit cards
Debit and credit cards can all be added to a digital wallet and converted to virtual cards when you enter card information on the app. Depending on the digital wallet, you will also be able to add cards to make purchases from a computer or smartwatch. It’s important to keep a physical fallback payment option or two in case a merchant doesn’t accept digital wallet payments.
Organize cards, coupons, tickets and more
Apple Wallet stores boarding passes, gift cards, coupons, tickets to concerts and sporting events, membership cards such as student cards, transit cards, and other documents . Samsung Pay and Google Pay also store your COVID-19 vaccination record. What you can store varies for each major digital wallet.
2. Access certain credit cards instantly after approval
When you apply for a new credit card, some credit cards no longer requires you to wait for it to arrive in the mail. American Express, for example, offers an instant card number upon approval, which can be added to Apple Pay, Samsung Pay, or Google Pay. You can use the digital wallet to start using your card online or anywhere it is accepted as a payment method.
Some cards may not even end up in your physical wallet. Deserve to First digital card, for example, currently only offers a digital card that can be used immediately in Apple Pay upon approval. The Apple Card can also be used instantly after approval in Apple Pay. It offers a physical card option, but you have to request it.
3. Earn bonus rewards
With a digital wallet, you may be able to accumulate the rewards obtained through credit cards, promotions, or the platform itself.
From your credit card issuer
Some credit cards offer special incentives when you upload them to a digital wallet. Take the US Bank Altitude ™ Reserve Visa Infinite® card, for example, which earns 3 points per dollar on purchases made with a mobile wallet and rewards in other categories as well. Apple Card earns 2% cash back on purchases made with Apple Pay in addition to rewards in other categories.
Through the digital wallet
Samsung Pay and Google Pay provide the option to earn additional rewards when you purchase from certain merchants through their app. Depending on the option, you may need to activate the rewards and follow the instructions to earn them. Conditions may also apply. This is a chance to stack the rewards earned from both a credit card issuer and your digital wallet for even more value.
4. Send and receive money
Whether you’re picking up the check or refunding a friend, Apple Pay, Google Pay, and Samsung Pay make it easy to send and receive money with a bank account, debit card, or the app’s account balance. Apple Pay, for example, lets you add Money apple by loading money into the app from a debit card or other source to send money.
5. Divide the bill easily
When sharing an expense as a group, you can foot the bill, amass a stack of credit card rewards, and ask your friends to pay you back. Some digital wallets like Venmo and Google Pay offer a way to easily split the bill.
With Venmo, you can request payment from one or more contacts in the app. You can also change the requested amount for each user. Google Pay allows users to track the status of payments made by contacts in the app. Use these options with caution because if you are not reimbursed, the bill is your responsibility.
6. Expense tracking
Some digital wallets, like Google Pay, make it easier to manage your finances. The app offers information on spending habits, access to a total balance on all linked accounts and a view of the available balance. Google Photos can also be linked to search transactions.
7. Get better protection against fraud
Digital wallets may require identity verification with a PIN, pattern, fingerprint, or other option before you can make a payment. It is an additional layer of security that is not present on a physical wallet. If someone were to take your debit or credit cards, they could potentially use the information on them for shopping.
A digital wallet offers better protection against fraudulent purchases. Digital wallets use a unique number and transaction code for purchases. When you pay at a store, the card number is not shared with the merchant. Through a process called tokenization, the digital wallet requests a token to represent the card and the result is an associated unique identification number which is used to make the payment.
8. Keep other people’s germs at bay
With a digital wallet, you don’t need to hand over a card to different merchants who have handled cash and cards prior to the transaction. It is not necessary to touch the payment terminal, unless you need to enter a PIN code for a debit card. Simply open the digital wallet, select a card, and hold the back of the phone near the payment reader to pay.
About the Author: Melissa Lambarena is Credit Cards Writer at NerdWallet. His work has been featured by The Associated Press, The New York Times, The Washington Post, and USA Today.