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Digital Wallets: What They Are and How They Work

May 24, 2019 | 3 minute read

Digital Wallets

Just like it sounds, a Digital Wallet is an electronic form of a physical wallet, allowing you to add your credit and debit cards so you can make payments digitally. Digital Wallets are a convenient and secure way to pay for items or services with ease from your: smartphone, smartwatch, tablet, or computer.

There are two main types of digital wallets available today:

  1. Online Digital Wallet
    An Online Digital Wallet is a web service that allows you to store and manage your personal information and card details used for online shopping in one central place. When shopping on retailers’ websites, add your items to your shopping cart and when you’re ready to checkout, simply log into your Online Digital Wallet instead of entering your personal and card information.

    Why is this important? Adding your name, address, and card details to multiple retailers’ websites presents obvious security concerns, especially with the increased number of data breaches experienced in recent years. An Online Digital Wallet keeps you in control of where your personal information and card details are stored.

    The two most common Online Digital Wallets are Visa® Checkout and MasterpassTM. Interestingly, not only can you use a Visa card in Visa Checkout and MasterCard in Masterpass, but you can also add many other cards to Visa Checkout and Masterpass, including: American Express, Discover, etc.
  1. Mobile Digital Wallet
    A Mobile Digital Wallet is an app that typically comes pre-installed on newer mobile devices, like smartphones, tablets, and smartwatches. You can add credit and debit cards, as well as discount/loyalty cards, gift cards, and more! The most common wallet apps are Apple Pay®, Google PayTM, and Samsung PayTM all of which can be used to make purchases in-store, within apps, and online.

    Mobile Digital Wallets are widely accepted by retailers, so you can use them just about anywhere you go. It’s quick and easy!

What About Security?

In many ways, Digital Wallets are safer than carrying your physical cards or cash. Every purchase is authenticated using fingerprint, facial recognition or password/PIN to prevent unauthorized use of your card(s).

Further, when you add your card details and personal information to a wallet service, the information becomes encrypted, so your personal data and card details remain private. When payments are made, your actual card number is never shared with the merchant, instead they use the encrypted card number to complete the transaction.

Since payments are frequently tied to debit and credit cards, you also have protection through the liability policies for fraudulent charges through your financial institution.

What Happens if You Lose Your Device?

If your mobile device is lost or stolen, you can remotely lock, locate, or erase the data, depending on the functionality of your device and provider. Additionally, your financial institution can deactivate your card(s) and help you through the process of replacing your card(s), should it be needed..

Conclusion

With Digital Wallets, you can leave your bulky wallet in your purse or back pocket and securely check out with the ease of your smartphone, smartwatch, tablet, or computer. Unlike paying for purchases with your credit or debit card, Digital Wallets offer increased security, convenience, and flexibility. Make the switch to a Digital Wallet today and shop with confidence.

If you’re interested, GECU offers both online and mobile digital wallet solutions, for faster, and more secure checkouts.