- "Mobile wallet" is a term for a virtual wallet that holds the information of your credit cards and other methods of payment.
- Various mobile wallet apps allow users to pay for goods and services without even having a mobile device on hand.
- Mobile wallets are highly secure and widely accepted, and they allow you to keep track of loyalty and bonus cards for various stores.
Mobile wallets utilize technology you already own – your smartphone, for example – to allow you to make in-store payments quickly and securely without looking for your credit or debit card. Different mobile wallets use different technologies and offer unique rewards to customers.
What is a mobile wallet?
According to Investopedia, a mobile wallet is a virtual wallet that stores credit card payment information as well as gift cards, coupons, bonus cards and other virtual payment information. They offer a highly convenient method of making payments and keeping up with bonus cards and coupons.
Some mobile wallets use near-field communication to transfer your payment information to a vendor's point-of-sale 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 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 mobile wallet app. Once you've installed your mobile wallet app, you can hold your phone over a store's NFC reader to make a payment.
Google Pay, a popular feature on certain Android devices, uses NFC technology. It does not share your credit card details directly with merchants; instead, Google partner Bancorp issues Google Pay users a virtual prepaid card that they use to make payments. So you pay Google, and Google pays the vendor.
Other ways to pay
Not all smartphones use NFC, 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 Pay, 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 Payments is another option for those with non-NFC devices. Square is a mobile app that lets users pay with their smartphones over a Wi-Fi 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.
LevelUp, another mobile wallet app for non-NFC devices, uses quick response (QR) codes to let customers pay in-store with their smartphones.
Benefits of mobile wallets
- Loyalty cards: Square, LevelUp and Google Pay all allow users to link loyalty cards for merchants to their mobile wallets and offer special promotions for their users. This makes it easy to keep track of the points you've earned at your favorite merchants and redeem special offers at checkout.
- Higher security: According to Consumer Reports, one of the top benefits of using mobile wallets is that they are easier to secure. On the one hand, carrying around cash and cards can make some people feel more secure because it's what they're used to. However, as we all know, these cards can be lost or stolen. In the case of cash, the money is typically gone forever. While credit cards can be canceled in the event of theft, this is still a major inconvenience, and in the event that purchases were made, many companies require proof before refunding the money. This can be highly time-consuming and costly.
- Widespread acceptance: When mobile wallets were first created, very few retailers accepted them. However, mobile wallets are now widely accepted, making it possible for users to frequent a wide variety of businesses and easily pay for their goods or services without having their wallets handy.
- Online shopping: Since many websites are starting to accept mobile wallets, users can easily make purchases without having the specifics of their payment information on hand.
- Organization: According to Discover, for those who have issues staying organized or have a busy schedule that makes it difficult to keep track of personal items and data, a mobile wallet can be a godsend. The easy storage of information for your credit, gift and loyalty cards makes it much simpler for you to run errands and shop.
- No charge for apps: One of the best parts of using a mobile wallet is that you get all of these benefits for free. There is no need to purchase expensive wallets to carry your real cards and other payment methods around. You can use these apps as much as you like, without any associated fees.
- Efficiency: There is no need to fiddle with your various forms of payment to find the right card while you wait in line. With a mobile wallet, you can pay for anything as long as you have your phone handy (sometimes even without your mobile device).