Credit cards have been extremely popular for decades now as a reliable form of payment. In fact, there are over 1 billion credit cards in use across the world. A credit card helps consumers make significant financial purchases and offers access to many rewards and benefits. Having and using a credit card is the first step to building your financial history and credit.
As modern technology improves, many people are making the switch from carrying credit cards in a physical wallet to storing them in a digital one. Digital wallets can be very convenient and reliable since you only need to tap your phone to make a purchase. Additionally, using a digital wallet allows you to access the same rewards and perks as your physical credit card.
However, some users are hesitant to make the switch because they wonder if digital wallets are actually secure. The good news is that digital wallets have secure technology, but that doesn’t mean you should go without your physical credit cards. Each payment method has its own advantages and disadvantages and different safety features. We’ll dive into the different security techniques of each payment method, so you can decide which one makes the most sense to you.
Are credit cards secure?
Credit cards have been a prevalent form of payment for decades now. Consumers began using credit cards because it allowed them to pay off larger purchases over time. Credit cards have been used longer than digital wallets, but are they more secure and safer to use? We’ll explain why this payment method comes with its own security advantages and disadvantages.
Fraud protection
Physical credit cards have evolved over time to enhance their fraud protection. However, consumers and merchants still have to worry about credit card fraud. Even with advanced security technology, businesses are expected to lose 130 billion dollars due to credit card fraud between 2018 and 2023.
Credit cards created additional chip technology to make these cards more secure, but hackers continue to get more advanced in stealing data. The magnetic strips on the back of the card can still be copied and duplicated. Thieves can then use those duplicates to make purchases in your name. Even though physical credit cards have strong security protection, it doesn’t mean they’re not at risk for fraud.
Stolen credit cards
One of the most significant risks of using a physical credit card is losing or misplacing them. You don’t want your credit cards or your credit card numbers to end up in the wrong hands. If your credit card is accessed and used by thieves, then you may end up with some unexpected charges on your account.
You might only realize your card is missing after unknown purchases start to pile up. Once you notice your card missing, you should contact your bank immediately to put a halt on your card. You’ll then have to wait for a new credit card to arrive in the mail.
Are digital wallets secure?
As online shopping gets easier and more efficient, digital payment methods have also been on the rise. In fact, this payment method is expected to be used by 60% of the world’s population by 2026. Even though this payment method is extremely popular, some folks may be hesitant about this modern technology. So, are digital wallets actually safe?
Tokenization
The good news is that there is secure mobile wallet technology to keep your financial information safe. Digital wallets use tokenization to keep your bank or credit card account information hidden. The digital wallet applies a random identification number, or token, to your purchase instead of providing your credit card information.
Encryption technology
Digital wallets also use encryption technology with every purchase. Encryption technology scrambles your financial information, making it harder for hackers to gain access to your personal information.
Passwords
Additionally, you can create a password and two-factor authentication on your digital wallet app or use biometrics (like Face ID or Touch ID on iPhones) through your phone to further protect your financial information. If your phone goes missing or gets stolen, your password and biometrics will be the first line of defense against the thief. A digital wallet has this security benefit in a way that a physical card does not.
Do you still need to carry credit cards?
If you’re more inclined to start using a digital wallet, you may wonder if you should even carry a credit card anymore. However, there are still limitations to digital wallets, including that they’re not accepted everywhere yet. A credit card is another reliable form of payment, and all merchants still accept them.
Also, it never hurts to have a backup form of payment with you. A physical credit card is still a reliable payment method in case your phone stops working or runs out of battery. In any case, it’s safe to have multiple forms of payment on you, so you can easily make your purchases.
Can you use a digital wallet or credit card to send and receive money transfers?
If you would like to send an international money transfer, many digital wallets allow you to send payments around the world. You can also receive money directly into your digital wallet from friend or loved one abroad. However, you will need a credit card or bank account to send money through a digital wallet.
You can also use a credit card to send a wire transfer, but it may cost you more money. Since the transfer is sent on credit instead of cash, there may be extra fees and interest included.
Remember to check your bank account regularly
Whether you strictly use a digital wallet or a physical card, you are still at some risk of fraud and theft. Get into the habit of regularly checking your credit card account for unsuspecting fraud or unfamiliar purchases. You can log into your online banking app or website to periodically review your account and confirm that all purchases are your own.
Even if you decide to stick to one form of payment over the other, remember to exercise caution and follow safety measures to keep your financial information secure. Even though a digital wallet has access to security technology that credits cards do not, you should still keep your physical wallet handy for whenever you may need it.
