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Understanding the Digital Wallet

From your local coffee shop to the country’s largest event venues, paying with the tap of a phone has become mainstream. Introduced by Google in 2011, the digital wallet has grown from a novelty concept to a daily-use product for millions. In fact, 53% of Americans today use digital wallets, according to Forbes, and that rate is projected to increase year after year.

This increased adoption has also raised questions about the benefits of digital wallets, where they’re accepted (and where they are not) and, of course, safety best practices. Here, we’ll discuss all three of those topics, and touch on how to get started with a digital wallet if you aren’t using one already. 

What is a digital wallet, and how does it work?

A digital wallet, sometimes referred to as an e-wallet or mobile wallet, is an application that can be used to securely store digital versions of your credit and debit cards — like the new Bask Bank Checking Visa debit card — on your mobile device. Within a digital wallet, it is also common to store digital versions of boarding passes, event tickets, loyalty cards and other user-specific documents and passes you might need to access quickly.

While digital wallet apps can be used on tablets, laptops and smartwatches, the prevailing use case is still the smartphone. However, it should be noted that the majority of the insights below hold true regardless of smart device type.

There are several digital wallet apps available today — some produced by phone manufacturers, some by financial institutions and others by third-party organizations. In the United States, the most popular digital wallet apps are Apple Wallet, Google Pay and Samsung Pay, according to the National Merchants Association. 

What are the benefits of using a digital wallet? 

The two core benefits of a digital wallet are convenience and security.  

Starting with the convenience factor, digital wallets turn your smartphone into a payment method that allows you to seamlessly purchase goods and services without the need to carry cash or credit cards — so you can say goodbye to that wallet overflowing with cards. Especially for consumers used to carrying multiple debit and credit cards alongside loyalty cards, this is a meaningful ease-of-use improvement. Now that Bask Bank has introduced the Bask Interest Checking Account, you’ll be able to conveniently add its digital debit card to your mobile wallet alongside your other cards.

Not only is contactless payment more efficient while on the go, it’s also more secure. It eliminates the chance for a card number to be transcribed, a PIN to be seen or a physical card to get lost. What’s more, digital wallet payments are typically encrypted, adding another layer of security that provides users with extra peace of mind. 

What ensures digital wallets are safe to use?

Today’s digital wallets offer a high level of security and use state-of-the-art encryption technology to secure user data. Your payment information is not actually displayed within the app, nor is it shared with merchants.

Compared to opening a wallet and pulling out a physical card, digital wallets make virtually every step of the payment process more secure. The only caveat — and this is true of all digital payment technologies — is that your digital wallet app is only as secure as your smartphone.  

Here are some digital wallet security best practices to keep top of mind: 

• Use only reputable card issuers like Bask Bank that have strict security protocols in place.
• Activate all security features offered within your digital wallet app, including secure login methods like multi-factor authentication and face ID.
• Use strong passwords that include letters, numbers, symbols and varied capitalization. Avoid using the same password twice, and change your passwords on a three- to six-month schedule.

For additional digital banking best practices, read our recent post Five Tips to Safeguard Your Online Bank Account.

What can I do to further safeguard my digital wallet? 

Digital wallets are quite secure from a technological standpoint, but many of the time-tested strategies for enhancing payment security also hold true.  

• Consider your surroundings and use your smartphone discreetly.
• Do not use digital wallet services to conduct financial transactions over unsecured Wi-Fi networks.
• Never leave your smartphone unattended in a public place.
• Monitor the financial accounts accessed from your digital wallet for any fraudulent charges.
• In addition to the digital wallet app itself, be sure to make the most of the available smartphone security features like passcodes and face ID. 

Want to learn more? This article offers additional safeguard measures along with information on digital wallet scams. 

How do I get started with a digital wallet?

Some smartphones now come with the manufacturer’s native wallet app by default, but if they do not, it can easily be found in your phone’s app store. 

Are digital wallets accepted at all store locations? 

While the popularity of digital wallets has increased dramatically in recent years, not all brick-and-mortar retailers accept digital payments. According to CNBC, just over half of U.S. retailers now accept some form of contactless payment.

The easiest way to tell if contactless payment is accepted is to look for a digital wallet logo or the corresponding symbol — multiple curved lines in a row — near the checkout area. 

The bottom line

Digital wallets have become a fast and secure way to pay for goods and services digitally, removing the need for a bulky wallet during the checkout process.

If you follow the recommended digital wallet security best practices, contactless payments can be very safe and secure. If you’re ready to get started, download the Bask Bank mobile debit card for your digital wallet today.