Ryan Kawamoto
Whenever you pull out your wallet to make purchases, you might notice that traditional wallets are gradually being replaced by their digital counterparts in this era dominated by smartphones and online transactions. Also known as e-wallets, these innovative payment solutions are transforming the way we make payments, manage finances and conduct everyday transactions. With their convenience, security and versatility, digital wallets have emerged as a game changer in personal finance.
What Are Digital Wallets?
Digital wallets are software-based platforms or applications that securely store payment information on a mobile device or computer. They enable people to make in-person and online purchases, send and receive money, pay bills, keep different cards and much more. Digital wallets utilize near-field communication (NFC) technology and QR codes to facilitate seamless and contactless transactions with another person or business establishment.
Why Use a Digital Wallet?
There are several reasons to use a mobile digital wallet. Some of the most notable key features and benefits include:
- Convenience: You can make payments with your phone without carrying a physical wallet, cash or checkbook. Plus, you can store as many cards as you wish, making completing transactions anytime and anywhere effortless.
- Enhanced security: Digital wallets employ robust security measures to protect your sensitive financial information. Instead of sharing card details with merchants, a unique virtual account number or token is used for each transaction, ensuring that the actual card information remains secure. Additionally, biometric authentication methods add an extra layer of security to access the digital wallet.
- Transaction receipts: They provide detailed transaction receipts and notifications.
- Contactless: They are a contactless method of payment.
Which Digital Wallet to Choose?
The most popular digital wallets are Apple Pay, Google Pay, Samsung Pay and Paypal. If you select among the aforementioned digital wallets, your only concern should be their compatibility with your smartphone. For instance, iPhone users should be more inclined to go with Apple Pay rather than Google Pay, as it is built-in in the device’s operating system.
When selecting a different type of digital wallet, you should always consider the following:
- Features: Consider what’s important to you, such as rewards, discounts and fraud protection.
- Security: Ensure your mobile digital wallet uses robust security measures to protect your data.
- Ease of use: They should be accessible and easy to set up and use.
How Do You Use Digital Wallets?
Apple, Android and Samsung smartphones have a preinstalled and secure Wallet app to hold your credit cards, banking information, insurance cards, events tickets, boarding passes, loyalty reward cards, etc. The first step to using your digital wallet is to add a card or banking information to your Wallet app. Once you’ve added a payment method on iPhones, double-press the power button to quickly access your cards from the lock screen. On Androids, tap on the small wallet icon in the bottom right corner of your lock screen. Then, simply hold your phone near the card reader and authenticate the payment with your fingerprint, PIN or facial recognition.
You can use your mobile digital wallet in most places that accept contactless payments.
What Are the Risks of Digital Wallets?
The truth is that it is the most secure payment method:
- All transactions are encrypted, and your bank account or card information is hidden from vendors.
- Making any payment requires you to authenticate biometrically or with your PIN or password.
- Many mobile digital wallets offer fraud protection.
The biggest risk of using a digital wallet is your phone battery dying: no battery, no wallet, no cash.
What If I Lose My Phone?
Losing your smartphone does not affect your digital wallet. Not only can you remotely erase a lost phone from any computer, but also making any payment using your wallet requires a secret pass, and each usage keeps a detailed transaction receipt, including the map address for each transaction.
What to Do Next?
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Ryan Kawamoto is a regional program manager for Older Adults Technology Services (OATS) from AARP, a national nonprofit behind the award-winning Senior Planet program that brings together older adults to find ways to learn, work, create, exercise and thrive in today’s digital age. A longer version of this article was originally published on www.seniorplanet.org by Senior Planet’s resident “Techspert” Jonathan Ushindi Zaluke.
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