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6 Min. Read

What Is a Digital Wallet? The 3 Best Choices for a Digital Wallet

What Is a Digital Wallet? The 3 Best Choices for a Digital Wallet

Technological advancements have changed the way that you go about your everyday routines. And one of those technological advancements is the digital wallet. As long as you have your mobile phone, there’s no more running to the store only to realize you forgot your wallet when it’s too late.

Digital wallets have increased in popularity over the years and the COVID-19 pandemic has only contributed to that rise. It not only makes paying for things easier, but it also helps with contactless payments and social distancing measures.

But what exactly is a digital wallet and how does it actually work? Let’s take a look.

Here’s What We’ll Cover:

What Is a Digital Wallet?

The 3 Best Choices for a Digital Wallet

Key Takeaways

What Is a Digital Wallet?

A digital wallet works exactly how it sounds: it’s a wallet, only digital. It makes accessing your financial accounts as easy as possible through a smartphone, smart device or computer. Since you’re always carrying your phone with you anyway, this eliminates the need to carry around a physical wallet.

You can store your debit card or credit card information to quickly and easily make a payment for something. For example, if you went to the store to grab some milk, you can pay directly through your digital wallet at the point of sale. There’s no need to carry physical cards with you.

How Does It Work?

The first thing that you need to do is choose which digital wallet you’re going to use. Most Apple users choose Apple Pay, and the majority of Android users tend to lean more towards Google Pay or Samsung Pay. There are other digital wallet choices, however.

Payment platforms such as PayPal and Venmo, for example, also offer digital wallets as an alternative to bank accounts. To set up your digital wallet you just need to enter your card information into the app. Once that’s done, all your financial information is encrypted.

This means that the only way for your digital wallet to get used is if you unlock your device and then confirm the details. If you want to make a mobile payment, just authorize the use of the digital wallet and hold it close to the card reader. This lets your information get transmitted at the point of sale or through a card reader.

Most retailers now offer the ability to pay with a digital wallet, however, some retailers don’t offer the choice. The easiest way to find out is to look for the contactless payment indicator, which kind of looks like a WiFi symbol on its side.

What Else Can a Digital Wallet Do?

Digital wallets are great for making quick and easy payments. But they’re also a great spot to keep other documents or information that is easily accessible. Plus, several individual apps have their own digital wallet so you don't have to carry an actual card.

This is most often used with loyalty cards and loyalty programs with fast-food chains, for example. Customers use the app to receive and redeem points for things like free drinks or other rewards. Starbucks is one of the biggest chains that lets you upload gift cards and then reload them with a credit card or debit card when they run out.

Here are some of the other things that can get stored in your digital wallet.

  • A boarding pass for a flight
  • Hotel reservations
  • A gift card or coupons
  • Loyalty rewards cards
  • Concert tickets
  • Movie tickets

The 3 Best Choices for a Digital Wallet

There are several apps out there that offer the ability to use a digital wallet. Plus, there are also cryptocurrency wallet options like a bitcoin wallet. Here are the 3 best choices for potential digital wallet holders.

1. Apple Pay

Most Canadian retailers now accept tap payments, so it’s easier than ever to use Apple Pay when you need to. To get started, just add your credit card or debit card information to the Apple Wallet app on your iPhone. You’re then ready to start using your digital wallet.

You will need to authorize the use of your cards in your digital wallet through your mobile banking app. This helps to avoid any possibility of fraud or someone stealing your financial information.

2. Google Pay

Similar to Apple Pay, you can use Google Pay at any point of sale terminal that accepts tap payments. One of the biggest things that set it apart from Apple Pay is that it supports membership and gift cards. Plus, you can download the app to any device, regardless if you’re an Android or iOS user.

3. Samsung Pay

There’s one thing that sets Samsung Pay apart from the other digital wallet choices. And that’s that the technology is compatible with every payment system that accepts credit card payments. It uses a Magnetic Secure Transmission Technology (MST) to make this possible.

Essentially, it sends the magnetic stripe data on your debit card or credit card to the point of sale terminal. It can be a great option since it’s widely accepted by Canadian financial institutions and supports loyalty rewards programs.

Key Takeaways

One of the biggest reasons that people choose not to use a digital wallet is they don’t believe it’s safe and secure. What do you do if you lose your phone or if it gets stolen? Are you putting your financial information at risk for hackers to steal? Those are all legitimate questions to ask yourself.

But, a digital wallet is actually much more secure compared to a physical card. This is because mobile payments are heavily encrypted and they are tokenized. Basically, your card information and account numbers aren’t actually stored in your digital wallet. There are additional security features such as facial recognition to stop unauthorized transactions.

Using a digital wallet can make for a more convenient, secure and efficient way to pay for something. Or, store things like concert tickets, airline reservations and gift cards. Depending on preference and the type of mobile device you use, Apple Pay, Google Pay and Samsung Pay provide a great starting point.

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