Mobile wallets utilize technology you already own — your smartphone, for example — to allow you to make in-store payments quickly and securely without having to locate your credit or debit card.
Different mobile wallets use different technologies and offer unique rewards to customers.
Some mobile walletsuse near-field communication (NFC) to transfer your payment information to a vendor's point-of-sale (POS) terminal. NFC is a technology that uses radio frequencies to allow smartphones and other devices to exchange information.
Before customers can use their high-tech wallets in stores, they must first upload all of their credit and debit card information to a digital account. They then link this account directly to their smartphones by downloading their provider's corresponding mobile wallet app.
Once you have your mobile wallet app installed, you can hold your phone over a store's NFC reader to make a payment.
Google Wallet, a popular feature on certain Android devices, uses NFC technology. Google Wallet does not share your credit card details directly with merchants. Instead, Google's partner, Bancorp, issues Google Wallet users a virtual prepaid card that is then used to make payments. So you pay Google, and Google pays the vendor.
Other ways to pay
But not all smartphones are NFC-enabled, which means that customers without NFC-enabled devices, like iPhone users, need a different way to pay with their mobile wallets in stores.
PayPal offers a unique mobile wallet service that lets users pay for items by entering their mobile phone number at the checkout counter. To use PayPal while shopping, simply activate your account for in-store checkout.
Much like Google Wallet, PayPal does not share your credit or debit card information directly with vendors. Instead, PayPal pays the vendor for you and then you pay PayPal through one of your accounts.
Mobile wallet apps
Square Wallet is another option for those with non-NFC devices. Square is a mobile app that lets users pay with their smartphones over a WiFi network, which means that you can make a payment without even taking your mobile device out of your pocket.
When you get within 100 meters of a participating merchant, your photo will appear on the merchant's register automatically. You can then pay simply by saying your name to verify your identity.
The LevelUp, another mobile wallet app for non-NFC devices, uses quick response codes (QR codes) to let customers pay in-store with their smartphones.
Perks of mobile wallets
Square, LevelUp and Google Wallet all allow users to link loyalty cards for merchants to their mobile wallets. And they all offer special promotions for their users.
This makes it easy to keep track of the points you've earned at your favorite merchants as well as redeem special offers at checkout.