A mobile wallet app allows you to leave your real, bulky (and likely disorganized) wallet at home by housing digital versions of all those credit, debit, ID, and loyalty cards.
While mobile wallets can be convenient, and are considered safe, it can be confusing to figure out which digital wallet app to use, and whether digitizing the contents of your wallet is worth the effort.
Read on to learn which apps are most widely accepted, how to set up a digital wallet, plus the pros and cons of ditching your old-school billfold and going virtual.
What is a Mobile Wallet?
A mobile wallet is just like it sounds–a “wallet” that lives on your mobile device. It stores credit, debit, gift, store, and loyalty card information so that you can easily pay for goods and services with your smartphone, smartwatch, or another mobile device.
You can even store theater tickets, insurance cards, ID, coupons, boarding passes, and hotel key card information. Some digital wallets also enable you to send money to friends, as well as receive payments.
You may also be able to use your mobile wallet instead of a physical card at some ATMs.
What is the Best Mobile Wallet App?
The major mobile wallets are Apple Pay, Google Pay, and Samsung Pay, which come already installed on mobile devices. Although they differ in layout, these mobile wallet apps have the same basic function that allows you to pay with a phone tap.
There are also mobile wallets you can download from the app stores, including wallets from banks and merchants such as PayPal, Walmart, and Starbucks.
When choosing a mobile wallet app, you may want to keep in mind that a mobile wallet offered by your credit card company may only be accepted at certain retailers.
In addition, merchant wallets will only work in that merchant’s store or online. For instance, the Starbucks wallet will only work at Starbucks.
Which one you pick will likely come down to how widely you plan to use a mobile wallet–will you use it just at your favorite retailer or more widely? The choice will also depend on what type of device you want to use it with.
How Do I Set Up and Use a Mobile Wallet?
The setup for the major mobile wallet apps is fairly simple: You launch the app, take a photo of your card or enter its information, and follow the step-by-step instructions. This process is then repeated for all other cards entered.
Generally, even if you load up several credit cards into your mobile wallet, only one of them will be your default payment option. That card will be the one that is used to process a purchase. If you want to use a different card, you may need to change the default card before you make the transaction.
Beyond credit and debit cards, the app may also walk you through configuring peer-to-peer payments like Apple Cash or Google Pays’ fund’s exchanges. You may also be able to link your PayPal account.
In addition, you may be able to import retail-store rewards cards, as well as museum or library memberships cards, event tickets, and airline boarding passes. This may involve scanning a QR code or selecting the “add to wallet” button in an email or a text message from the issuer.
When you are ready to pay for purchases you’ll want to make sure the merchant accepts mobile money. These businesses can typically be identified through a contactless payment indicator (usually a sideways Wi-Fi symbol).
You can then just open your digital wallet app, hold the phone near the wireless reader at the register, and authorize the payment. Your phone’s screen will confirm the transaction.
Are Mobile Wallets Safe?
Unlike cash, which can be stolen, and credit cards, which can be copied, the card information you load into a mobile wallet is encrypted. That means that your actual card or account numbers are never shared with the merchant.
Another safety feature: In order to make a payment, you have to unlock your device and also type the passcode or use your fingerprint or face recognition to unlock the mobile wallet.
In the case of theft, it’s not possible for anyone to use a mobile device to make a payment without providing the required security credentials.
These safeguards actually make mobile wallets more secure than carrying physical credit cards and cash, which can easily be compromised.
Pros and Cons of Using Mobile Wallets
Is a mobile wallet right for you? Here are some key pros and cons you may want to consider.
Mobile Wallet Pros
They’re convenient. If you’re out and about without your wallet or bag, you can still make purchases, and use your coupons and rewards cards. You may also be able to get cash at an ATM or check a book out of the library–all from your mobile device.
They’re secure. Mobile wallets provide a layer of security you don’t get with cash or using a debit or credit card. Your payment information is saved in one protected, central location. The card number is never stored in the app itself but is instead assigned a unique virtual number. This protects your money even if your smartphone is lost or stolen.
They can help you track your spending. A mobile wallet can help you track and better manage your spending. All of your transaction information is stored in the app so it’s easy to see how much you’re spending and where each week.
Mobile Wallet Cons
They’re not accepted everywhere. There are still some industries where cash is the only currency accepted. Even in businesses that do take credit, not all of them accept mobile wallets. To accept a mobile wallet, businesses need to have payment readers that take near field communication (NFC) payments, and not all of them have updated readers. This can cause a problem if a mobile wallet is all you have on hand.
Your phone could die. Cell phones often run out of battery life, and if you’re without a charger, that handy mobile wallet will no longer exist. That can put a crimp in your shopping plans or become a major problem if you have important documents such as train passes or concert tickets in your mobile wallet.
You may end up overspending. The thinking on mobile wallets is often similar to that with using a credit card. Because cash isn’t physically leaving your hands, spending can feel less real. If you have spending issues, a mobile wallet can make it easy to spend mindlessly.
Recommended: 9 Tips to Stop Overspending
A mobile wallet is a digital way to store credit, debit, ID, and gift cards so that purchases can be made using a mobile smart device rather than a physical card.
Mobile wallets can help simplify your financial life. They allow users to make in-store payments without having to carry cash or physical credit cards. They’re easy to use and have hefty safeguards.
However, they aren’t universally accepted. It’s worth your while to determine whether the retailers you frequent accept them to help determine if a mobile wallet is a good option for you.
Looking for more convenient ways to manage your money? With a SoFi Money® cash management account, you can spend, save, and earn competitive interest all in one place.
You can also track your weekly spending, pay bills, and send money to friends right from your smartphone using the SoFi app.
Photo credit: iStock/hiphotos35
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC . Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.