A digital wallet is defined by Investopedia as a system that stores personal payment information and passwords for multiple payment methods. Just like your physical wallet, a digital wallet stores your credit, debit, and other card information. However, all of the information is conveniently located on your smartphone. With 77% of American adults owning a smartphone, extending the convenience of these devices to consumer banking and purchasing habits is a natural next step.
If you've never used a digital wallet, using your phone to complete a retail transaction might seem like a hassle. Why pull up your bank information or type in a card number when you could just swipe a card? Thanks to the wonders of technology, digital wallets don't require you to do any of that. Near field communication (NFC) technology is used to allow your phone to pass important information to a retailer when the phone is in close proximity to a payment terminal. You just hold your phone a few centimeters away from the reader to pay for your purchases at the register. If you own a smartwatch, you don't even need to carry your phone, much less, an overstuffed wallet or large purse.
It's common to experience some resistance when entrusting your financial information to a new source. However, technology is continually improving security techniques to keep your money safer. Banks and credit unions are embracing the convenience and security of digital wallets as well. Setting up a digital wallet with your current credit or debit card is easy. If the benefits of a digital wallet aren't immediately obvious, consider these 7 reasons to upgrade your traditional wallet to a digital one.
Smartphones have added so many conveniences to our lives that most of us consider them a necessity. A digital wallet is definitely a big convenience to add to the list. Most apps on your phone have a specific function that makes your life easier. A digital wallet can be used for your daily expenses both online and in stores. With a digital wallet, there's no need to dig for the right card or correct change. Your transactions are complete with the touch of a button or by waving your phone over a checkout terminal.
If your wallet is lost or stolen, your credit and debit cards are readily available for someone else to use. On the other hand, your phone has additional layers of security to keep your financial information safe. In addition to your personal passwords required to get into your phone and access the apps you use, the card information in your digital wallet is encrypted. Instead of usable card numbers and account information, the data is stored in payment codes. This type of encryption also means that online and retail stores don't have to store your card information when a digital wallet is used. In the event of a data breach, your account information wouldn't be accessible to hackers.
Recovering your information is also easier with a digital wallet. If you do lose your information, your bank can simply reissue a new card directly to your phone. The results are practically immediate in comparison to waiting days for a physical card. If your phone is lost or stolen, you can even lock your digital wallet remotely, adding another layer of protection.
A traditional wallet requires you to carry physical cards that take up space. Besides your regular credit and debit cards, most stores require you to get a store card to join their loyalty program and qualify for savings. Using the cards is easy enough, but as they pile up you often find yourself digging for the right one at the checkout counter. Eventually, a wallet purge is necessary, and you end up leaving the cards you need at home. Your digital wallet allows you to store all the same information in an orderly way without taking up space.
Paying with a digital wallet often doesn't even require you to open an app. Many smartphones have fingerprint scanners which allow you to make a transaction without even waking up the display. If you're the person who is always digging for the right card or emptying the contents of your purse on the counter to pay, you could save time at the register. Probably even more important, as digital wallet usage gains popularity, those neverending retail lines could finally become shorter.
Avoid Annoying Forms
Long forms are a major reason for cart abandonment during online purchases. No one has time to fill out a page of information for a single purchase. Besides, most consumers aren't interested in sharing their personal information more often than necessary. Since your digital wallet already has all of your information stored in one place, your transaction can be completed immediately.
Use Online and in Retail Stores
The number of retailers accepting mobile payment is growing rapidly. In fact, millions of stores accept the three most popular forms of digital payment (Samsung Pay, Apple Pay, and Android Pay). Digital wallets are easy to use online too. As online retailers recognize the security benefits of digital wallets, they are making it easier to access them on individual websites. The advantages for consumers is obvious; no more typing card numbers into your phone to make a purchase.
Rewards and Bonus Programs Made Easy
Using a digital wallet at checkout will automatically use those bonus points you've been gaining when you make a purchase. Instead of digging through your wallet or wasting your points because you forgot your card at home, take advantage of those hard-earned bonuses with your fingerprint or a swipe of your phone.
The idea of digital wallets isn't technically new. It's basically the same way you spend money online with companies like Amazon or Paypal. As digital payment methods become more widely used in retail locations, banks are making the switch to digital wallets as well. To learn more about digital wallet use, visit the Hudson Heritage Federal Credit Union website today. It's our goal to get you the convenience and security you need for your financial future.