4 common misconceptions about digital wallets

Quick insights

• Digital wallets can be a safe and convenient way to make purchases.
• They can store multiple payment types.
• Digital wallets may be easy to set up and use.

Digital wallets are becoming commonplace with more and more consumers preferring to use their phones and electronic devices to make purchases. But some may not fully understand this payment method yet. They may have questions about its safety, acceptance and even how and use to use a digital wallet.

In this article, we’ll discuss four common myths about digital wallets.

Understanding digital wallets

Digital wallets are an electronic alternative to your physical wallet. They can store credit card data and other financial information, allowing you to pay for transactions without a physical card present.

Digital wallets can be stored on your phone, a wearable device or in an app. But even with their increasing prevalence, there are still some common misconceptions about digital wallets.

Myth: Digital wallets are not safe

Digital wallets are still a relatively new payment option. This newness, however, means they have been created with modern banking and online security in mind.

Digital wallets include advanced security measures such as encryption and tokenization to protect the transaction. They can sometimes mask a card’s data, so your card’s real information—16-digit card number, expiration date and security code—may not be included in a transaction.

Some digital wallets also require verification before completing a transaction. Verification is an added step to verify your identity that can include:

• Passcodes
• Verification codes
• Biometric data

During the digital wallet setup process, users are often required to set up security measures that are not available with traditional payment methods, like cash or checks.

Myth: Digital wallets are not widely accepted

Digital wallets are typically accepted by a wide range of retailers, both online and in stores. Popular digital wallets like Apple Pay, Google Pay and Samsung Pay are accepted at many locations worldwide and come preloaded on most mobile phones.

However, acceptance can vary depending on the country and the specific retailer. In some countries, digital wallets have become a popular method of payment, while in others, they are still gaining traction. 

You may want to check whether your specific digital wallet is accepted at the places where you regularly shop. It's generally a good idea to carry a backup payment method just in case.

Myth: Digital wallets are hard to set up

Setting up a digital wallet is usually a simple process. Most digital wallets require just a few steps to set up.

Users typically need to download an app or create an account. Once they have, they enter their card information to finish setting up the digital wallet.

In addition, digital wallets can offer:

• Assistance and guidance: Many digital wallet providers offer step-by-step guidance during the setup process and have customer service teams available to assist.
• User-friendly interfaces: Many digital wallet apps are designed with user experience in mind, aimed to make the process intuitive and straightforward.
• Instant activation: Once a payment method is linked, the digital wallet is typically ready to use immediately.
• Flexibility: Users can often link multiple cards or accounts to their digital wallet, allowing them to choose the most convenient payment method for each transaction.

Myth: Digital wallets are hard to use

Digital wallets can provide a quick and convenient way to make purchases. If you’re using a digital wallet to check out online, you typically won’t need to enter your credit card information each time you make a purchase. When using a digital wallet on your phone, you may only need to hold it near a payment terminal to initiate your transaction.

You may also find digital wallets more convenient if you want to limit your contact with public surfaces. Because many digital wallets offer contactless payment, you may be able to avoid touching a payment terminal to complete your transaction.

Considerations when using a digital wallet

There are many digital wallets to choose from. You can use the version built into your mobile phone, like Google Pay or Apple Pay, or you may choose to download an app or sign up for an online digital wallet, like Paze.

It could be a good idea to brush up on digital wallet safety regardless of what platform you choose. Here are a few things you may want to consider when using a digital wallet:

Security measures

You may want to prioritize security when using a digital wallet. This includes setting up strong, unique passwords and enabling two-factor authentication if available. By regularly updating your app, you may also benefit from the latest security patches. Consider avoiding using public Wi-Fi networks when making transactions, as they can be less secure.

Terms and conditions

Before using a digital wallet, you may want to review the terms and conditions. This includes understanding any fees associated with the service, how disputes are handled and what happens if your device is lost or stolen.

Monitoring

Regularly checking your digital wallet and linked accounts for any unauthorized transactions could help you spot and report suspicious activity. If you spot fraudulent activity sooner rather than later, you could potentially better your chances of resolving the issue more quickly and minimizing any potential damage.

Backup and recovery

Ensure you have a backup and recovery plan in place in case your device is lost, stolen or damaged. This could include writing down any recovery codes or phrases and storing them in a secure location.

Keep in mind that some vendors don’t accept digital wallet payments. In addition, phones can lose battery power and technical glitches can happen. You may want to have a second way of paying whenever possible.

In summary

Digital wallets are a relatively new payment method that’s become increasingly popular in recent years. Because they are relatively new, digital wallets are often built with modern security measures and designed for ease of use. When you use a digital wallet—be it through your mobile device, online or an app—you may find it a convenient and quick way to make purchases.