Digital Wallets: Accommodating Mobile Payments & More

Digital Wallets: Accommodating Mobile Payments & More

Digital wallets, secure applications software that enable consumers to transform their smart phones, watches and laptops into mobile funds-transfer devices, are moving deeper into the electronic payments mainstream.

The term “digital wallets” is a catchall for services like Apple Pay, Samsung Pay, Google Pay, PayPal, Venmo, Zelle and more. While unlikely to replace cash anytime soon, a survey found six in 10 Americans claimed to rely on digital currency of one kind or another – credit or debit cards and digital wallets. 

Introduced 25 years ago to pay for Cokes via text message from a Swedish vending machine, these contactless packets of financial-technology payments software downloaded to your smartphone or other mobile device are becoming ubiquitous due to their convenience.  

Worldwide, there is an estimated 3.4 billion digital wallets in circulation in 2022 and they are projected to reach 5.2 billion wallets by 2026.

 

Becoming more than digital payments tools

Digital payments tools make it easy to deposit or transfer funds between your Piedmont Advantage Credit Union deposit, loan and investment accounts. They also make it easy to pay bills, to shop in-store or online, and to dine in or out.

But digital wallets are expected over time to show their potential as more than just facilitating the electronic transfer of payments between consumer and vendor.

Someday soon, you and your family may be using digital wallets as a “virtual ID’’ to store and access information about you from driver’s licenses, health care records, credit and debit cards, even Covid-19 vaccination and testing status.

 

What are the advantages of using digital wallets?

The number one reason is perhaps obviously the convenience of this payment method. With consumers doing more banking, shopping and other funds payments online – a trend that Covid-19 hastened – digital wallets augmented the traditional payments node of cash registers and point-of-sale terminals.

Information on transactions made with digital wallets is stored electronically, making it easy for the budget-conscious to meticulously track their spending.

Wallet issuers and their marketing partners often encourage frequent wallet users with discounts on products and services and other promotions.

Also, the contactless nature of digital wallets reassuring for users with concerns about the spread of germs from contaminated hands and surfaces.

 

What are the limitations of digital wallets?

Though the appeal of digital wallets has risen, they still aren’t fully embraced. Threats to the privacy and security of wallet users’ personal information remains a hurdle (more on that below).

There’s also the limited number of retailers and services providers who are equipped to accept digital currency, mainly due to the cost to acquire and support the specialized terminals and scanners needed to process payments.

Also, some cashless payment apps impose fees on users for each transaction – an expense that can quickly add up for frequent users.

 

How secure are digital wallets?

Digital wallets boast of multiple layers of security. For one, digital-wallet providers rely on digital “tokens’’ to track and protect their users’ identities. More levels of security kick in, including the software application that powers it. Add to that the firewall protection from the retailer, the credit card company, and the financial institution issuing the digital wallet.

Funds in certain digital wallet accounts, like those from Google Pay, Cash App and Zelle, are federally insured through their banking partners by the Federal Deposit Insurance Corp. Others, like Venmo, have no such coverage on funds held in their digital-wallet accounts.

 

Ready to open your digital wallet?

Contact Piedmont Advantage Credit Union in North Carolina about opening a convenient digital wallet account and find out who can assist you with exploring our menu of other financial products and services.