More Americans Are Using Digital Wallets Than Ever. Which One Should You Choose Right Now?
- 75% of respondents in a recent survey said they have used a digital wallet in the past year.
- Also known as an e-wallet, it allows individuals to make financial transactions electronically.
- Digital wallets are secure and use a process called "tokenization" where your financial information is encrypted so it can't be compromised.
- Since the start of the pandemic, the use of digital wallets has exploded, with digital wallets like Apple Pay, Google Pay, and Venmo among the most popular.
Here are the top digital wallets that can offer a smooth digital experience.
A new survey shows that 60% of people are comfortable with leaving their house without their wallet and only carrying their phone. Since the start of COVID-19, the use of digital wallets has skyrocketed in popularity. In fact, 75% of respondents in the survey said they have used a mobile wallet in the past year.
People are so used to contactless payments that over half (56%) found it a hassle to have to enter their PIN. The use of digital wallets has continued to grow in acceptance worldwide. Here are some of the most popular digital wallets.
What is a digital wallet?
A digital wallet is a software program that stores your credit or debit cards on your computer, an online service, or a smart electronic device. Also known as an “e-wallet,” it allows individuals or businesses to make financial transactions electronically.
Digital wallets like Samsung Wallet, Apple Pay, and Google Pay allow you to store your credit card and debit card information on the app. You can even store gift cards, loyalty cards, coupons, plane tickets, event tickets, and more. The mobile payment system lets you use your smartphone or smartwatch at retail stores that have compatible card readers.
How does a digital wallet work?
Apple Pay and Google Pay use near field communication (NFC) on your smartphone or smart watch to allow two different devices to exchange information. As long as the merchant has a compatible credit card reader, you open up the app on your device and place it close to the reader to complete the financial purchase.
Samsung Wallet uses both NFC and Magnetic Secure Transmission (MST) to transfer your card's information. MST generates a magnetic signal, similar to the magnetic strip on the back of your credit or debit card to make the payment. MST's advantage is that you can use it at any place where there is a traditional card machine, the retailer does not have to make an upgrade like they need to with NFC technology.
Other digital wallets like Paypal and Venmo use a QR code, similar to a barcode you scan with your phone's camera to use for financial transactions. Some companies use a "closed digital wallet" like the Starbucks and Amazon Pay app which allow you to only pay for things on the company's site. You still get all of your card's rewards and benefits when using it through a digital wallet. There are no fees when using a digital wallet.
Are digital wallets safe?
In addition to its convenience and speed over a regular wallet, digital wallets are considered safer than a credit card. Digital wallets use a process called "tokenization." Your actual cards are not stored in your e-wallet. They use an encrypted version of your card made up of random numbers when making transactions. Your personal information is not shared with merchants. The apps also require you to authenticate yourself with a fingerprint sensor, pin number, or iris scanner before you can use it to make a payment.
The best digital wallets
According to its website, Apple Pay is already installed on any Apple device and is accepted by 85% of retailers in the U.S. You can use Apple Cash with Apple Pay, a digital card that stores cash you want to send to friends or family. You can send the money from your wallet or Messages. The contactless payments app has privacy and built-in features and can be used to make purchases in a store, online, or in an app. Apple Pay has close to 44 million members and accounts for almost half (45.5%) of all in-store digital wallet purchases.
Google Pay is available for both iOS and Android devices. The app allows you to stay connected with your favorite vendors, see your past transactions, and add loyalty cards, gift cards, event tickets, and much more. You can link your bank accounts, Gmail, and Google Photos to gain insights into your spending habits. Users earn cash back rewards when activating offers from businesses and making purchases. Privacy and security is built into every payment and you can send money to a friend or start a group to split expenses for dinner, bills, rent, and more. Google Pay will help you do the math and keep track of who's paid. Twenty-five million people use Google Pay.
Samsung Wallet is a mobile payment system that lets you use your smartphone to pay at retail stores around the world. Samsung states that Samsung Wallet is accepted at more locations than most other methods of mobile payment due to its MST and NFC technology. Samsung Wallet is available on Galaxy smartphones and Samsung smartwatches. The app also offers a rewards program for users. You can add gift cards, event tickets, and get discounts at different businesses using the app. Samsung Pay Cash allows you to create a virtual card which you can use for transfer purposes or as a virtual prepaid card after you have linked it to your bank account. Samsung Pay has 16.3 million users.
PayPal is a widely-used app and online website that is available for both iOS and Android. You can send money securely across the globe. Its "Pay in 4" program lets you split your purchase into four interest-free payments with no late fees. PayPal offers rewards when you use the app. It allows users to see their past transactions to keep track of spending. Many online sites allow you to choose your PayPal account for payment, speeding up the payment process. Since there are over 200 countries that use PayPal, the app has an automated currency conversion process. In addition to making purchases, you can use the app to send money to friends and family. Paypal has 429 million active user accounts.
Venmo is another popular mobile wallet app available on iOS and Android. There are 83 million users that use the app for quick and easy transactions. Venmo was first started as a way to send and receive money to friends and family. You can send money with the app through a text message and you can either keep your financial transactions private or public. You can sync the app with your social media sites, contacts, and more. You can link the app to your bank account and with the Venmo Credit Card. You can also earn up to 3% cash back or even auto-purchase the crypto of your choice from your Venmo account.
There are many other popular digital wallets, such as Zelle, Cash App, and Dwolla. With the rapid rise in e-wallets, more businesses and consumers are adopting the technology.
Alert: highest cash back card we've seen now has 0% intro APR until 2025
If you're using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2023 The Ascent. All rights reserved.