Simply carry along your smartphone and that’s all you need if you’re using a digital wallet. It sounds like a dream come true to not worry about leaving behind a credit card when paying in stores. However, is it really safe? The choice to go cash free means weighing both the pros and cons first.
The Rise of the Digital Wallet
Apple Pay was the first digital wallet option to take off and it’s still the most popular option. However, Samsung Pay is actually accepted at more locations. When Apple Pay came out in 2014, a new trend emerged, though consumers were hesitant at first. In fact, the Federal Reserve found that only 13% of consumers in 2015 were interested in using mobile payment apps or digital wallets.
The limited availability of retailers has made it difficult for the digital wallet trend to grow as fast as creators had hoped. In one survey, only 16% of people had even completed a mobile wallet transaction because only 36% of retailers in the U.S. offer it as a payment method.
Still, that number is set to grow. Almost 70% of retailers in the same survey plan to start accepting digital wallet payments in the next five years.
Another study shows that mobile payments are anticipated to reach $410.5 billion by 2020. The same study also showed that almost 25% of American consumers had used a digital wallet sometime in 2016.
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Enjoying the Benefits
The appeal is obvious – no wallet to carry around or cards to dig through. Instead of carrying cash or credit/debit cards, you just carry a smartphone. It’s that simple. It’s literally a digital wallet in the palm of your hand. You’re able to scan in multiple cards in a single app.
Another benefit is additional security. Card skimmers are a major risk with traditional card payments (read more about RFID credit card data theft here), but that risk is drastically minimized with digital wallets. There are also multiple security layers to help prevent any data from being stolen.
For instance, most mobile payment apps generate unique codes when you pay versus sending your actual card information to the retailer. This means even if a retailer is hacked, they won’t have as much information stored on you.
Understanding the Risks
For all the benefits, there are risks to this technology. For one thing, if your device is stolen, all of your payment information is right at the thief’s fingertips. Of course, the same could happen with your normal wallet.
Another problem is one that all tech faces – coding flaws. All it takes is a single security flaw within the mobile payment app to allow hackers to steal users’ information.
As everyone’s seen, a single data breach could result in your card information being stolen. This is also a risk when paying using traditional methods, such as the hacks with Target and Home Depot.
Since an Internet connection is required to complete the transaction, it’s possible for nearby hackers to disrupt the connection and steal data.
As you can see, the risks are similar no matter what type of payment method you use. Should you use a digital wallet? As long as you take precautions, such as using strong passwords for your apps and ensuring you’re using real apps versus malicious ones, it’s just as safe as credit cards.
Related Read: Safe Ways to Send Money Online
Contribution by Crystal Crowder
About the Author
Crystal lives and breathes tech. She’s spent over a decade writing tutorials, reviews, and more on tech, business, and lifestyle sites. Her idea of fun is settling down with the latest tech and gadget news.