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Using a digital wallets to make a purchase is fast, convenient and it keeps your money safer than a physical wallet. Devices such as; smartphones, laptops, smartwatches and tablets all have the capacity to be used to make purchases without having to access your physical credit card.

Here is some important information about digital wallets, how the work, how they keep your money safe and the benefits of using them to purchase services and goods.

What is a Digital Wallet?

Digital wallets are in simple terms an electronic version of a physical wallet. They store things such as credit card information, tickets you’ve purchased and loyalty cards.

Individuals who have a digital wallet are able to access their personal data from devices like your smartphone, smartwatch, computer or tablet. A major benefit of this is that it declutters and avoids the burden of carrying a bunch of physical cards around with you. Digital wallets will also make payments quick and easy.

The Difference Between Digital Wallets and Mobile Wallets

“Digital wallet” and “mobile wallet” are terms that are often used interchangeable. However, they do have a few slight differences.

In simple terms “digital wallet” is the umbrella term that includes mobile wallets.

A digital wallet is software that stores your payment information and can be installed on your desktop computer, laptop or mobile device.

A mobile wallet is a type of digital wallet that is located on a mobile device, such as your smartphone or smartwatch. You can use mobile wallets to make contactless, in-store purchases at a store’s physical checkout.

A “digital wallet” in comparison is a broad term, it might be used to refer to software that’s used primarily for online purchases rather than contactless, in-store checkout.

The best way to put it would be to say that a mobile wallet is a type of digital wallet, but not all digital wallets are mobile.

The Different Types of Digital Wallets

There are several different types of digital wallets. The majority of them can hold several cards at once. Also, many devices have built-in digital wallets that support some of your favourite digital payment platforms.

Here are some examples of dgitial wallets and mobile payments;

  • Apple PayAn easy, secure and private way to pay with your Apple devices.
  • Fitbit Pay Pay right from your watch or tracker. No phone or wallet needed.
  • Garmin PayA simple way to pay with your smartwatch.
  • Google PayA safe, simple and helpful way to pay and manage your money.
  • PayPal Secure online checkout with all your card benefits.
  • Samsung PayCheck out securely in person or online with your Samsung device.
  • Venmo Send or receive money using what’s in your Venmo account or bank account.
  • ZelleNo cash? No problem. Zelle can help you send money securely to friends and family across the country.

It is important to be mindful that different digital wallets are better suited for different reasons and it is important to use the wallet that best suits your needs as a consumer.

How Does A Digital Wallet Work?

The majority of digital wallets come with an app that you can download for your mobile, computer, watch or laptop.

Whenever you are out shopping, you can pay with most wallets by holding your device near a terminal that has the contactless symbol (four curved lines).

To complete the transaction, you are usually required to provide a passcode or authenticate via your fingerprint or facial recognition. After doing this, you can use the app to make purchases, pay someone directly or even use tickets for things like concerts or travel.

For individuals using a nonmobile digital wallets think of it like you are doing online shopping from a laptop you might be prompted to log in or provide a password. Doing this is much faster, less time consuming and easier than finding your physical card and then typing in several rows of information.

Ways To Use Your Digital Wallet

One of the major benefits of having a digital wallet is the ability to make quick transactions. This can come in handy especially if you’re out of the house and you have left your physical wallet at home.

A large number of businesses have updated their payment terminals to enable their customers to make contactless payments.

Here are just a few ways you can use your digital wallet:

  • Online – If you’re an avid online shopper, entering your card information every time you make a payment can get a bit tedious. Digital wallets can eliminate that process by automatically filling in your information for you. This means that checking out is only a few clicks away.
  • On the go – Simply pay with your mobile wallet on your smartphone, smartwatch or other mobile device when you’re checking out in store.
  • In apps – Use your digital wallet for easy, secure in-app purchases.
  • At ATMs – You might also be able to use your mobile wallet instead of a physical card at some ATMs.

How Safe Are Digital Wallets?

Many people who are unfamiliar with digital wallets might be unsure about how safe they are.

It is important to know that digital wallets are very safe whenever you make a purchase with a digital wallet, a unique 16-digit number, or token, is assigned to your card. Unlike your credit card number, a token is more secure because your card number isn’t seen by the business. This token can only be used with a unique, encrypted code that gets applied to each individual transaction.

This means that when you shop using a digital wallet, you can purchase products knowing your full financial information is hidden from the business.

What to Do If Your Device Is Stolen or Lost?

If the device you have your digital wallet on ends up being lost or stolen there are apps available which will allow you to remotely lock or erase your device’s data. Using these apps and setting up additional security, like fingerprint recognition and password protection, can help make your device more secure.

Before you decide to sell or recycle your device, it’s a great idea to back up your data and then delete all your personal information to make sure you prevent the occurrence of credit card fraud and identity theft.