What Is a Digital Wallet (and Why Should You Have One)?
The way we handle our money has evolved significantly over recent years. Digital wallets with embedded contactless payments have made cash a thing of the past in many instances, while online banking gives us easy access to our accounts 24/7. But aside from the increased practicalities of having your money accessible on your smartphone, it’s also considered safer.
Many people worry about fraud and scams when it comes to online transactions or their digital bank accounts, but security technology is ever-adapting to protect our money. Here, we take a look at what a digital wallet looks like, and how it can help to keep your funds safe.
What is a digital wallet?
A digital wallet is an application that stores various types of payment card details in one convenient location. You can access them on any device, be it on your smartphone or laptop. Not only can digital wallets store payment card information, but also event tickets, travel tickets, store loyalty cards, gift cards and even your driving licence and electronic car keys.
The idea behind them is to eliminate the need for a physical wallet, that could easily be lost or stolen. Many smartphones have built in digital wallet apps, but you can also download others. They use Wi-Fi, bluetooth and magnetic sensors to pass data and complete transactions, while encrypting your details to keep your personal information secure. Using a digital wallet also gives people in underserved areas better access to financial services and commerce opportunities than if they’re restricted to physical payments.
All your accounts in one place
The days of having a wallet or purse filled with numerous different types of cards are over. With a digital wallet platform, everything you could need is at your fingertips. So no matter if you want to pay by debit or credit card, use a store loyalty card or even a gift card, all of these can be uploaded to your smartphone.
Not only does this mean you won’t ever forget the right card, but it also protects your accounts against the chance of you losing your cards. Lost cards can be picked up by scammers and used to access your funds, whereas even if you lose your smartphone, no one will be able to spend your money for you. The use of face recognition or fingertip identification software is paramount in keeping your digital wallet secure, so be sure to set up these safety features on all of your devices.
Fraud protection
Unfortunately, using your physical bank card to make payments where you have to insert your card can leave you vulnerable to a number of card scams. A digital wallet protects you completely from this risk, as it’s impossible for hackers to access your banking information when you pay contactless.
Scammers can interfere with ATM machines or card readers and install devices that send your card’s information to them. These shimmers and skimmers can often be difficult to detect, and the consequences can be tragic if your card is cloned or your personal information is harvested from it during a withdrawal or transaction. If you have to insert your card to withdraw cash, the safest way to avoid fraud is to always use the ATM machines inside a bank.
Easy access
Digital wallets securely save all of your account details, passwords and login information, so that you can distribute your money with ease, 24/7. They also have payment protection features and encryption technology built in, to help reduce the chances of hackers being able to identify your account.
When you’re purchasing items from websites, using your digital wallet rather than your card directly is considered safer. This is because the app will use a tokenization system to keep your bank account details hidden during the transaction, plus you benefit from the app’s consumer rights protection. This will help you retrieve your money in the event of an order being placed on a fraudulent website, or in the unlikely event that someone else accesses your account.
👉 Read more on how to transfer money with digital wallets.
Check your account regularly
Whether you opt to use a digital wallet or pay directly with your bank cards, be sure to check your accounts regularly. If you notice any payments you don’t recognise, or small amounts going out frequently at odd hours of the day or night, be sure to report the activity to your banking provider.
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