Physical credit cards may become a thing of the past sooner rather than later as payments through digital wallets become more common. Digital wallets are a broad term describing payment methods through a digital device, such as Apple Wallet on your smartphone, which has other items you can store in the Wallet aside from just banking information. Digital wallets typically work by tapping your smartphone or smartwatch on a device where you’d normally swipe a credit card. This technology is catching on so much that Mastercard now has plans to do away with 16-digit credit card numbers entirely.
There are some clear benefits to using digital wallets over physical credit cards. There is some convenience to them. Tapping your phone or watch to pay rather than getting out your wallet and the card within can be faster. Having the information stored digitally also means you can do both in-store and online payments from the same app, like Apple Wallet. You don’t have to worry about the card or your wallet being stolen, or someone trying to read the numbers on it over your shoulder. Digital wallets also offer some enhanced security because each transaction is labeled with its own one-time digital code. Depending on how they are set up, fingerprint or facial recognition also makes it harder for a thief to use them.
The technology replacing physical credit cards
As mentioned before, Apple Wallet is one such digital wallet option. You can store the information of various credit and debit cards within, but that’s not all. You can also store ID’s like your driver’s license or passport and specific rewards cards from retailers. Apple offers various incentives and rewards for using the Wallet to pay for items. It will also help you track online orders and information for tickets you purchase, such as for an airplane. That’s more than your credit card can do in one place. Google Wallet and Samsung Wallet function similarly, and we have a guide to help you figure out which payment app is better for your needs.
If you don’t feel like pulling your phone out of your pocket, that’s no problem with digital wallets, either. Just use your wrist to pay with your smartwatch. Depending on the watch you have, you can integrate your Google Wallet with it to pay that way. Even luxury smartwatches like Garmin are getting in on this with Garmin Pay, which is compatible with both credit cards and bank accounts directly.
PayPal has long been an online source for making payments connected to your bank account. While this is great for shopping online if you don’t want to use your credit card number on websites, PayPal also has its own physical options. It has a tap-to-pay ability if you have the app on your smartphone.
Are digital wallets more secure?
While there certainly are clear benefits to these digital wallets, are they actually that much safer than physical credit cards? That is not so easy to answer. Your phone or watch can get stolen just like your wallet can. You may have more security steps in place, though, to protect your Google Wallet from paying for just anything. Because these apps have so many features, they are very convenient, but that also comes with drawbacks. Too many third-party integrations increase the risk of your data being stolen digitally. It’s also hard to claim that anything is completely hack-proof, so there is always some inherent risk that your digital wallet can have its information leaked.
There are also online scams and other phishing attacks to be aware of that make your digital wallet vulnerable. Falling victim to legitimate-looking texts or emails can give thieves access to your digital wallet. Even fake websites will be set up, hoping you fill out personal information on them. It’s referred to as typosquatting and is a way hackers have stolen Microsoft passwords in the past.
Ultimately, digital wallets still carry some risks, the same way credit cards do. Digital wallets, though, do have the benefit of offering convenience, multiple functions, and some other security protocols to try to give themselves an advantage over physical credit cards. Perhaps one day, more cards will go the route of Mastercard, and the digital wallet will be the future.
