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Mobile wallets allow you to pay with your credit or debit card from an app on your phone. They’re a convenient and secure alternative to carrying around cards and cash — and, while you can’t yet pay with mobile wallets everywhere in the U.S., they are quickly rising in popularity. You may already have an app on your phone that will allow you to tap-and-pay at major retailers.
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We’ve got 3D printers. Teslas. Computers that can beat humans at chess.
And yet in the United States, most of us are still using chip-and-signature credit cards and cash. It’s a new decade — shouldn’t we be paying for groceries with our eyeballs by now? Yes, and we’re almost there.
Mobile wallets, which are already going strong in Europe and parts of Asia, may finally be coming to America.
“Overall, the total number of people using proximity mobile payments in the U.S. this year will grow 9.1% to 64.0 million,” eMarketer reported in October 2019. “That represents nearly 30% of all U.S. smartphone users.”
But what, exactly, are mobile wallets? Are they different than digital wallets? And are they safe?
Keep reading for the answers to those questions, plus our picks for the best credit cards to use with mobile wallets.
Digital wallet is a broad term for software that allows you to store your credit card numbers, debit card numbers, and loyalty card numbers in the cloud, then access them from a device like your laptop, tablet, or phone.
Digital wallets can help you pay when you’re shopping online (think: PayPal), transfer money between friends (think: Venmo), or pay with your phone at the gas station (think: Apple Pay).
A mobile wallet is a type of digital wallet that’s accessible through an app on a mobile device (usually a phone or wearable).
You can use a mobile wallet to “tap to pay” when you’re checking out of a store — a convenient alternative to paying with cash or carrying around a bevy of physical cards. You can also add items like boarding passes and concert tickets to mobile wallets.
Chances are, you already have one. When it comes to the most popular mobile wallets, industry insiders refer to them as “The Pays”: Apple Pay (for iPhone); Google Pay, previously known as Google Wallet (for Android); and Samsung Pay (for, yep, Samsung).
You won’t find many differences between each of the Pays; which one you use will depend on which type of phone you have. Other players include Fitbit Pay and Garmin, which are compatible with their smartwatches.
As for banks, well, they didn’t do so great in the mobile payments game. Wells Fargo Wallet, Citi Pay Masterpass, and the in-store version of Chase Pay have all been discontinued in recent years.
“[T]he days of bank-branded wallets are coming to an end,” Jordan McKee, an industry analyst, told Digital Transactions in August 2019. “Operating-system based wallets like Apple Pay and Google Pay have an inherent advantage from a user experience and customer on-boarding standpoint.”
You could also choose to download a payment app from a third party. But unless it’s offering some really noteworthy features or rewards (and is really secure!), it seems wiser to stick with the big names for now.
Using a mobile wallet is super simple. After downloading your chosen app, all you’ll need to do is add your credit and loyalty card information, either by scanning the numbers or typing them in.
Then, when you’re shopping in person, you can look for the contactless payment indicator (basically a sideways WiFi symbol), which means the point-of-sale (POS) terminal is equipped with near-field communication (NFC) technology and can accept mobile wallets.
The process for completing the transaction will depend on which app you’re using:
Easy peasy, right?
Samsung Pay uses both NFC and Magnetic Secure Transmission technology, which means you can use it at terminals without the contactless symbol.
You can often use your mobile wallet to get cash from ATMs, as many (but not all) now offer cardless withdrawal options. In some cases, you must have a bank account at the affiliated ATM for it to work: Chase ATMs, for example, are rumored to only allow Chase customers to perform cardless transactions. Bank of America ATMs, on the other hand, accept all debit cards for contactless withdrawals.
Welcome to the future, right? …Not quite yet.
In the U.S., only about half of restaurants and retailers accepted mobile payments as of October 2018, reported PYMNTS.com.
You’ll mostly find contactless POS terminals at major retailers; according to a Forbes contributor, Visa says that 80 of its top 100 U.S. merchants offer customers the ability to pay with a mobile wallet.
Yet only 60% of Visa transactions occur at a contactless-enabled location, and fewer than 2% of American brick-and-mortar retail sales were made with contactless technology in 2019.
So, while we’ve got a ways to go until mobile wallets are accepted everywhere, you should be able to use them at most major chains.
As an example, here are some of the retailers that accept Google Pay.
Yes. In fact, they’re generally safer than traditional wallets — here’s why:
In general, you can expect to earn the same rewards value with a mobile wallet that you’d earn when using a physical card. But some mobile wallets offer extra rewards for their users, such as:
When you use a mobile wallet, your credit card issuer will try to code your payments based on the merchant.
So if you use your mobile wallet to pay for dinner with your Chase Sapphire Preferred® Card (Review), for example, you’ll usually earn 2X points per dollar — just as if you’d paid at the restaurant with your physical card.
We say “usually” because there may be occasions when your purchase is coded incorrectly. In its terms and conditions, Amex warns of this, saying: “A purchase may not receive a higher percentage reward if the merchant submits the purchase using a mobile or wireless card reader or if you use a mobile or digital wallet.” But as mobile wallets become more popular, we suspect this will become a non-issue.
Be aware of which card is at the top of your digital wallet. If you want to pay for groceries with the Blue Cash Preferred® Card from American Express (Review), and then use the Chase Sapphire Reserve® (Review) to pay for your bus fare, you’ll need to switch the cards before reaching the register or select the right one when the time comes.
Some cards even offer additional bonuses for paying with a digital wallet. Here are four you should know about:
Given that we live our lives online, it only makes sense that we’d pay for things virtually, too.
While mobile wallets aren’t yet super common in the U.S., I’m guessing they’ll blow up over the next few years.
Personally, I’m sold on the idea: one less thing to carry, and one more way to protect my credit card information? Count me in!
Susan is a freelance writer who specializes in turning complex financial topics into engaging and accessible articles. She's been writing about personal finance for six years, and was previously the senior writer at The Penny Hoarder and a staff writer at Student Loan Hero. Her personal finance writing has also appeared in publications like MarketWatch and Lifehacker.
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