What is a Digital Wallet?
Have you ever wondered what is a digital wallet? Even though they’ve been around for years, not everyone has adopted them yet. This shouldn’t be a surprise as most people are still used to using cash and cards to pay for purchases. It also doesn’t help that cryptocurrency also uses digital wallets which are completely different from a traditional e-wallet.
Once you understand what a digital wallet it is, you’ll likely wonder what took you so long to make the switch. The truth is, digital wallets are making the lives of Canadians much more convenient. Here’s everything you’ve ever wanted to know about digital wallets.
What is a digital wallet?
This may sound obvious, but a digital wallet is like your regular wallet, but digital. Instead of carrying around various debit and credit cards in your wallet, you would store them on your phone. Whenever you go to make a purchase, you’d have your cards available. This is obviously better than carrying a giant wallet packed with cards.
What’s interesting about digital wallets is that it’s not just for payments. You can store additional things such as loyalty cards, boarding passes, quick reference (QR) codes, and more. By having everything stored on your phone, there will never be any worries about not having the right card or documents handy when you need them.
How do digital wallets work?
Just about every smartphone now comes with Near Field Communication (NFC) as a standard feature. This technology is the same thing that’s used when you tap your debit or credit card to make payments. Once your cards are linked to a payment app, you can use it to make payments at any merchant that accepts tap payments.
To store your information, you would have to use an app. Most people will use Google Pay or Apple Pay to manage their digital wallets, but some individual apps also allow you to make payments with them.
Note that your financial institution must support mobile payments for you to be able to add your cards. Just about every major financial institution in Canada now supports mobile payments, so you shouldn’t have any issues.
How does Apple Pay work?
Apple Pay comes included as a default app on all new Apple iPhones. All you really need to do is add your payment information. In most cases, you’d take the following steps:
- Open Apple Pay
- Click the + sign
- Select debit or credit
- Scan or manually add your card details
- You’ll then get a verification code or link from your bank
- Verify your card and it’ll be linked
You can now use your cards in your digital wallet to make payments.
If you’re looking to add your board pass, QR codes, or loyalty cards to Apple Pay, you need to open the email, notification, or app that contains the information first. You should then get a prompt that says add to Apple Pay. Click that and follow the instructions.
How does Google Pay work?
Google Pay is the most popular digital wallet for Android users, but it’s not included with each device since there are different manufacturers. Google Pixel devices come with the app installed, but if you have a Samsung device, you’ll get Samsung Pay by default.
Regardless of what phone you have, you can download Google Pay from the Play Store. Once you have it downloaded, you would do the following to add your cards.
- Open Google Pay
- Select add a payment method
- Choose credit or debit card
- Scan or manually add your card details
- You’ll then get a verification code or link from your bank
- Verify your card and it’ll be linked
Google pay also allows you to add loyalty cards, gift cards, and public transportation cards. To do so, open Google Pay, scroll down and select add a card. Select the type of card you want to add. Finally, choose the supported card/program and enter your details.
How to use a digital wallet?
Okay, now that you’ve got all of your cards set up, you can actually start using it. Remember, you can only use your digital wallets where contactless payments are accepted. Also, most credit cards have a tap limit of CAD $250. If your purchase amount is greater than that, you’re going to have to insert or swipe your card.
Generally speaking, you’ll perform the following steps to make a payment.
- Open your payment app
- Select the card that you want to pay with
- Hold your phone up to the payment terminal and wait for your payment to go through
Note that most digital wallets will require you to enter your PIN or biometrics before you can make a purchase.
Are digital wallets safe?
Are digital wallets safe? That’s one of the first questions people ask when they start looking into what is a digital wallet? The idea of having all of your most vital information stored on your phone is scary, but the reality is that it’s one of the most secure places to secure your banking information.
Unlike physical debit and credit cards, digital wallets don’t store your actual card information. It’s impossible for your digital wallet to reveal your credit card numbers, expiration date, and PIN number. That’s because digital wallets use tokenization which replaces your real information with random numbers. Basically, this tokenization hides all of your information.
What’s also appealing about this is the fact that merchants never get access to your information either. If there’s ever a data breach where you shop, any payments you made with your digital wallet would be completely secure. If you ever lost your phone, thieves would need your PIN or biometrics to access your cards. Even then, they can only make small payments with them.
It’s actually fair to say that digital wallets are more secure than carrying your real wallet since you’re limiting your exposure. Thieves can’t steal information if you don’t physically have it on you.
It’s also worth mentioning that the regular zero-liability protection that’s available from your credit card providers still applies when you pay with your digital wallet.
Why you should use a digital wallet
It really comes down to convenience. With digital wallets, you can store as many credit, debit, and loyalty cards as you like. All of these cards are stored within a single app, so it’s easy to manage everything you have available.
For example, some people carry quite a few credit cards since they come with different benefits and earn rates. You could use one for grocery shopping and another for gas purchases. You may also have one of the best credit cards in Canada where you’re trying to meet the minimum spend requirement to get your welcome bonus.
There are also times where you might be shopping at a store and they’re an Aeroplan or Air Miles partner. By having your loyalty information stored in your digital wallet, you can earn extra points.
Don’t forget the security features. By using your digital wallet, you never risk your information being compromised like you do when you use physical cards.
So what is a digital wallet? To simply put it, it’s a convenient and secure way to make your daily purchases.
