Here's Why I'm No Longer Using My Apple Wallet

I'm not going to lie: buying stuff with Apple Pay during the pandemic was a game changer. Contactless pay? Perfect. Don't have to carry my credit cards around? Great. Two taps and FaceID? Wow -- that's convenient.

But recently I've come to realize a major weakness with Apple Wallet and other digital payment platforms. And no -- it's not just a security issue (though that is a concern, too). Instead, it has to do with earning cash back and getting the maximum rewards for my purchases. Here's what I mean.

Digital wallets sometimes don't give you bonus points or cash back

Many of my credit cards are designed to give me extra cash back for certain purchases. For example, I have a grocery card that earns more rewards at supermarkets and a dining card that earns more for restaurants, deliveries, and takeout. When I use, say, the dining card at a local restaurant, I expect to earn extra cash back.

When I use the credit card itself to pay, the restaurant is given a code. This code lets the credit card company know it's a restaurant and thus eligible for my bonus cash back. You would expect the same to happen when you store credit cards in your digital wallet and use them for specific purchases, right?

Well, unfortunately, sometimes it doesn't.

Digital wallets create a third party between credit card companies and merchants. That means your card issuer won't receive information about the merchant directly, but rather from the digital wallet. If the digital wallet doesn't code the merchant correctly, your credit card issuer may not give you bonus cash back.

Check the fine print

In fact, credit card companies are aware of this problem themselves. For instance, take a look at this little fine print from a popular Discover cash back card.

"Purchases made through third-party payment accounts, mobile or wireless card readers, digital wallets or similar technology will not be eligible if the technology does not provide sufficient transaction details for rewards qualification."

And here's another example from American Express.

"You may not receive additional points if we receive inaccurate information or are otherwise unable to identify your purchase as eligible for an additional points category. For example, you may not receive additional points when:

• A merchant uses a third-party to sell their products or services; or
• A merchant uses a third-party to process or submit your transaction to us (e.g., using mobile or wireless card readers); or
• You choose to make a purchase using a third-party payment account or make a purchase using a mobile or digital wallet."

Don't miss those first two bullets. Not only might you miss earning bonus points through digital wallets, but third-party payment processors, like Stripe or Toast, could also send the wrong code to your card issuer.

What can you do if you don't get the right cash back?

Unfortunately, if you're set on storing cards in Apple Wallet and making purchases with Apple Pay, there's no easy solution -- you'll just have to monitor your transactions and make sure you're getting the right amount of credit card rewards. The same is true if you purchase something using a third-party payment processor: You'll just have to check that the processor assigned the right code once the charge is approved.

That said, if you catch a purchase earning the wrong cash back percentage, contact the number on the back of your credit card. Many card companies, like American Express, will take a second look and ideally assign your purchase with the right amount of points.

As for me, I'm going to carry my cards around in my physical wallet. Now, I will keep one card in my Apple Wallet -- you know, just in case -- but it's a card that earns a flat cash back rate, so I'm not really concerned about it failing to register bonus points. If you can't go back to the physical wallet, just make sure you're monitoring your purchases and getting the right cash back. Don't leave any rewards on the table -- you earned 'em, now make sure the credit card company gives them to you.