Digital Wallet
What Is a Digital Wallet?
A digital wallet (or electronic wallet) is an application that runs on any phone or connected device. It securely stores your payment information and passwords in the cloud.
Digital wallets allow you to pay when you're shopping using your phone or connected device so that you don't need to carry your cards around. You enter and store your credit card, debit card, or bank account information and can then use your device to pay for purchases.
Digital wallets can also store:
- Gift cards
- Membership or loyalty cards
- Coupons
- Event tickets
- Plane and transit tickets
- Hotel reservations
- Driver's license
- Identification cards
- Car keys
How a Digital Wallet Works
Digital wallets use a mobile device's wireless capabilities like Bluetooth, WiFi, and magnetic signals to transmit payment data securely from your device to a point of sale designed to read the data and connect via these signals.
The card information you've stored in your wallet and choose to use for a transaction is transmitted from your device to the point-of-sale terminal, which is connected to payment processors. Then, through the processors, gateways, acquirers, or any other third parties involved in credit and debit card transactions, the payment is routed through the credit card networks and banks to make a payment.
How to Set Up Your Digital Wallet
Apple Pay, Google Pay, and Samsung Pay are three of the most popular digital wallets. Other popular digital wallets include PayPal, Venmo and Zelle. Most banks and financial institutions, including OneBank offer their own digital wallets. Regardless of what digital wallet you chose, to set up your wallet, locate the wallet app on your smartphone, then enter your credit and / or debit card information. Digital wallets allow you to store multiple cards and to set your default payment method. Your Digital Wallet can’t be used for a payment without your authentication.
When shopping on your smartphone, there’s usually a one- or two- click payment prompt to make it as easy as possible to pay using your digital wallet.
If you’re shopping at retail locations, you can hold your phone or device over a point-of-sale system wherever you see the Contactless Symbol.
When using an app, such as one for buying food or a ride-share service, you could opt to use your Digital Wallet as the payment option, saving time by not having to enter in your payment information each time you use any app.
4 perks of paying with your Digital Wallet
- You no longer need to carry a physical wallet
- You can purchase things in-store, online or in-app using the device of your choice, such as your smartphone or smartwatch
- Your purchases are more secure because data is encrypted
- You’re able to withdraw cash from ATMs without a physical debit card
How your Digital Wallet is secured
Mobile payments offer enhanced security features. When you set up your Digital Wallet, your account information is not stored on your device. Each card is assigned a virtual card number that’s only associated with the Digital Wallet and mobile device you use. The virtual card number is a substitute for your actual credit card number—meaning your actual credit card is never given to the merchant where you shop. Don’t stress if you lose track of your phone—all Digital Wallet transactions require the verification you set up, like a fingerprint scan.
Your Digital Wallet also uses:
- A virtual card number that replaces sensitive card information in a transaction.
- Depending on your phone type, you can authorize payments with a fingerprint, passcode, or even facial recognition.
- Your card information will not be shared with most merchants.