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Digital wallets, also known as mobile wallets, have grown in popularity over the years. But the freedom to leave all your cards at home isn't the only benefit users will enjoy. A digital wallet has many benefits outside of condensing physical cards and offering a seamless and secure payment option.
The top three digital wallets are Apple Pay, Google Pay and Samsung Pay. Venmo and PayPal can also function as digital wallets, both in stores and online. A major digital wallet is typically already downloaded to your mobile device or can be downloaded from the app store for free.
Once set up, a digital wallet could offer bonus rewards, lower exposure to germs at the register and help you split payments with friends, among other options. Get to know all of the potential functions of your digital wallet.
1. Declutter your wallet
In addition to organizing your credit cards, a digital wallet can store other items that occupy space in your physical wallet.
Condense your debit and credit cards
Debit and credit cards can all be added to a digital wallet and converted to virtual cards when you input the cards' information on the app. Depending on the digital wallet, you may also be able to add cards to make purchases from a computer or smartwatch. It's important to still keep a physical backup payment option or two in case a merchant doesn’t accept digital wallet payments.
Organize cards, coupons, tickets and more
The Apple Wallet stores travel boarding passes, gift cards, coupons, tickets to concerts and sporting events, membership cards like student IDs, transit cards and other documents. Samsung Pay and Google Pay also store your COVID-19 vaccination record. What you can store varies for each major digital wallet.
2. Access some credit cards instantly after approval
When you apply for a new credit card, some credit cards no longer require you to wait for it to arrive in the mail. American Express, for instance, offers an instant card number after approval, which can be added to Apple Pay, Samsung Pay or Google Pay. You can use the digital wallet to start using your card online or wherever it is accepted as a payment method.
Some cards may not even make it into your physical wallet. Deserve's Digital First Card, for example, currently only offers a digital card that can be used immediately in Apple Pay after approval. The Apple Card can also be used instantly after approval in Apple Pay. It offers a physical card option, but you have to request it.
3. Earn bonus rewards
With a digital wallet, you may be able to stack rewards earned from credit cards, promotions or the platform itself.
From your credit card issuer
Some credit cards offer special incentives when you upload them to a digital wallet. Take the U.S. Bank Altitude™ Reserve Visa Infinite® Card, for example, which earns 3 points per dollar on purchases made with a mobile wallet and rewards in other categories, too. The Apple Card earns 2% cash back on purchases made using Apple Pay in addition to rewards in other categories.
Through the digital wallet
Samsung Pay and Google Pay offer the chance to earn additional rewards when shopping with select merchants through their app. Depending on the option, you may have to activate rewards and follow instructions to earn them. Terms may also apply. It’s a chance to stack rewards earned from both a credit card issuer and your digital wallet for even more value.
4. Send and receive money
Whether you’re picking up the check or paying back a friend, Apple Pay, Google Pay and Samsung Pay facilitate sending and receiving money with a bank account, debit card or the balance in the app’s account. Apple Pay, for instance, lets you add Apple Cash by loading money into the app from a debit card or other source to send money.
5. Split the bill easily
When sharing an expense as a group, you can pick up the tab, rake in a pile of credit card rewards and get your friends to reimburse you. Some digital wallets like Venmo and Google Pay, offer a way to easily split the bill.
With Venmo, you can request a payment from one or several contacts in the app. You can also change the amount requested for each user. Google Pay allows users to track the status of payments made by contacts in the app. Use these options cautiously because if you're not reimbursed, the bill is your responsibility.
6. Track expenses
Some digital wallets, like Google Pay, facilitate managing your finances. The app offers insights on spending patterns, access to a total balance across all linked accounts and a view of the balance available. Google Photos may also be linked to search transactions.
7. Get better fraud protections
Digital wallets may require verification of identity with a PIN, pattern, fingerprint or other option before being able to make a payment. It’s an added layer of security that’s not present on a physical wallet. If someone took your debit or credit cards, they could potentially use the information on them to go on a shopping spree.
A digital wallet offers greater protection against fraudulent purchases. Digital wallets use a unique number and transaction code for purchases. When you pay in a store, the card number isn’t shared with the merchant. Through a process called tokenization, the digital wallet requests a token to represent the card and the result is a unique identification number associated that is used to make the payment.
8. Keep others’ germs at bay
With a digital wallet, you don’t have to hand a card to different merchants who have handled cash and cards prior to the transaction. There's no need to touch the payment terminal unless you’re required to input a PIN for a debit card. Simply open the digital wallet, select a card and hold the back of the phone close to the payment reader to pay.