Mobile pay
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Cash, check, credit cards and debit cards have long been the only ways people paid for products and services. But new technologies have given consumers a dizzying array of other options as well.

Chief among them are mobile wallets.

A mobile wallet can turn a smartphone into an access device to connect with a payments network. Mobile wallet technology explains why you can now pay for things by waving your smartphone (or even your smartwatch) over the merchant’s chip reader instead of reaching into your pocket.

If you’ve never used a mobile wallet before, you might be curious about how it works — and why it could be a better option than a credit card. Read this guide to learn how mobile wallets work, the pros and cons of using a mobile wallet, and which mobile wallet might be right for you.

How mobile wallets work

Think of a mobile wallet as the virtual version of the wallet you carry with you every day. Your wallet might include a travel credit card and a cash back credit card, for example; your mobile wallet includes those two cards as well, but it stores the credit card information virtually.

A mobile wallet can also store coupons, reward cards, gift cards and so on. A password or PIN might be required to access the information for security purposes.

When it comes time to pay, just select a credit card on your digital wallet the same way you’d pull a credit card out of your physical wallet. Many people put the majority of their purchases on the same credit card, which makes mobile wallet payment quick and easy — all you have to do is open the app and hold your smartphone against the payment terminal.

Mobile apps use near-field communication, or NFC, which enables the smartphone to communicate with the payment terminal at the point of payment. Typically, the consumer taps or waves the mobile device to allow the payment terminal to access the stored payment credentials.

You can also use mobile wallets to streamline online purchases. No more entering your 16-digit credit card number!

Mobile wallet versus credit card

Mobile wallets aren’t so different from plastic credit cards in the sense that both are processed through the same payment networks.

What’s different is that the credit card number, expiration date and other information are stored in a mobile app or chip on the smartphone instead of on a plastic card with a magnetic stripe or chip.

Benefits of a mobile wallet

  • Mobile wallets use data encryption and tokenization to ensure your bank and credit card account numbers aren’t transmitted when you make a payment. This reduces your risk of becoming a victim of identity theft or credit card fraud.
  • If your mobile device is stolen, it’ll be difficult for a thief to access your digital wallet without your fingerprint, Face ID or passcode. If your physical wallet is stolen, a thief could start making payments with your credit cards right away.
  • Making a mobile card payment is often faster than paying with a credit card. Not only do you not have to dig a credit card out of your wallet, but the actual process of payment also goes much more quickly. No standing around waiting for the card reader to process your credit card information!
  • Some credit cards reward mobile wallet purchases. The Wells Fargo Cash Wise Visa® Card, for example, offers 1.8% cash back on Google Pay™ or Apple Pay® mobile purchases during the first 12 months of card ownership. The information related to the Wells Fargo Cash Wise Visa Card has been collected by Bankrate and has not been reviewed or provided by the issuer or provider of this product or service.

Disadvantages of a mobile wallet

  • Not all retailers accept mobile wallets, and not all retailers might not accept the type of mobile wallet you’re currently using.
  • It might be more difficult to keep track of which credit card you’re paying with. If you’re trying to maximize your credit card rewards by using different cards for different types of purchases, you’ll need to remember to switch between cards in your mobile wallet — otherwise, everything will end up on your default credit card.
  • If your mobile device runs out of battery, you won’t be able to access your mobile wallet or make payments.

Popular mobile wallet options

Here’s a quick overview of some of the top mobile wallets. Follow the links to get our full-length guides, and learn which mobile wallet is right for you.

  • Apple Pay®: This mobile wallet lets you use your iPhone, Apple Watch, Mac or iPad to make payments — and is accepted nearly everywhere.
  • Google Pay™: Like Apple Pay, Google Pay lets you use your laptop or mobile device to make payments both in-person and online. Several payment tools, including Android Pay, have been combined under the Google Pay brand.
  • Samsung Pay®: This digital wallet service works with Samsung devices — plus, it offers rewards on everyday purchases.
  • Chase Pay: Combine your cards, wallets, loyalty programs and more for a one-stop payment option.
  • Square Cash: This peer-to-peer mobile wallet lets you transfer money between two people. It’s a good option for people sending money to friends, family, and even landlords.
  • Popmoney®: Another peer-to-peer mobile wallet for people looking to transfer money between friends.
  • PayPal OneTouchTM: Make online purchases quickly and easily by connecting with PayPal™.

Pay it safe

Despite the wow factor of mobile wallets, many people still prefer traditional payment methods, which are convenient, familiar and widely used.

If you’re holding off on mobile wallets because you’re concerned about security, be aware that digital wallet providers are working hard to ensure their technology is equally or more secure than using a traditional plastic credit or debit card. The major mobile wallet providers have security overviews where they outline everything they’ve done to keep your information safe — here’s a link to Apple Pay’s security and privacy overview, as an example — so take some time to read through them and learn how these services are storing, using and sharing your information.

So consider trying a mobile wallet, and see if it makes your life easier. If you don’t like it, you can always go back to using your credit and debit cards.

Cash still works fine, too.


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