Last Updated: March 4, 2024
3 min read
Using your credit card
Key points:
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A digital wallet is a convenient way to complete a transaction using your smartphone at checkout.
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A digital wallet can help you store credit cards, gift cards, customer loyalty cards, membership cards, and more.
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Digital wallet payments might be a safer option because you reduce the risk of losing a physical credit or debit card.
If you have a smartphone, you have access to a digital wallet through your built-in apps or downloadable from your app store. In fact, digital or contactless payments can be used in-store or online to auto-fill form information beyond your payment method.
Digital wallets come in three types—closed, semi-closed, and open. A closed wallet only interacts between you and a specific store, like a restaurant that gives rewards for using their app for ordering. With a semi-closed wallet like Zelle, the issuer or app has a contract to be accepted at specific stores. The most flexible digital wallet type is an open wallet like Apple Pay, Samsung Pay, Garmin Pay, and in-store with Google Pay. These open wallets work across most digital payment platforms.
Here are some popular reasons to start using a digital wallet to store your credit card in your phone.
How digital wallets work
Most digital wallet apps work with the help of a technology known as near-field communication, or NFC. An NFC system integrates with cashier/check-out stations via mobile apps and e-commerce websites to process your payment information. The NFC-enabled devices communicate wirelessly with each other over a very short distance, typically about 4 cm or less, allowing you to complete a contactless payment transaction.
Efficiency and speed
No more digging in your purse or wallet for a physical card. No typing in your PIN. In mere seconds, you can complete a contactless payment transaction using your digital wallet with a tap or wave of your smartphone at the checkout terminal. Plus, as more consumers adopt this technology, checkout lines could become shorter as payments get speedier.
Simplicity on the go
If you’re like most people, you always have your phone with you. Imagine—you could leave your wallet and physical cards at home if you carry your payment and credit cards in the mobile wallet on your phone. If a merchant accepts digital wallet payments, you’ve got everything you need right in your phone.
Organization of a mobile wallet
A digital wallet can help you organize everything for purchases from credit cards, gift cards, membership cards, and customer loyalty cards. Plus, you can store other items like concert tickets, airline boarding passes, transit cards, and even a few states allow you to store your driver’s license.
Security of a digital wallet
Unlike your physical wallet, you can use settings on your mobile device to add an extra layer of security for your personal information. And it’s harder for someone to use cards on your smartphone than it would be if they just found your wallet full of credit cards on the street. Plus, when you make a digital wallet payment, the transaction uses a unique code instead of your card number. Merchants don't store your account information or personal information with the transaction record which can help protect your data.
No more pesky forms
Your digital wallet comes with time-saving features. Because it saves your billing and shipping information tied to your card, it can help you breeze through online forms with a simple click to confirm your data.
Discounts and bonuses
Many closed-wallets, like Starbucks or McDonald’s, offer incentives for your purchases by rewarding you with points you can redeem for in-store product. Often, they reward users with special discount days or events to earn double- and triple-points. You can usually access the information at-a-glance within your digital wallet app.
Did you know?
If you want to earn rewards for your purchases, all Discover credit cards offer either cash back or Miles on all of your purchases.
Compare Discover Cards
Costs of a digital wallet
Digital wallets bring a lot of convenience at no extra cost for most transactions, giving you a seamless and straightforward experience. While certain scenarios, like loading a prepaid card, might incur a flat fee, the overall ease of using a digital wallet makes it a cost-effective choice.
