What You Need to Know About Mobile Wallets

Mobile wallets have been on consumers radars for more than two years now, but if you think you know all there is to know about the technology, think again. Mobile wallets have been on consumers radars for more than two years now, but if you think you know all there is to know about the technology, think again. Here are a few main points about mobile wallets that you should know.

  1. No pen required – Mobile wallets are completely card-free, meaning you don’t have to drop your purse to sign a credit terminal. That’s the end, here are the means: There are two ways to use your smartphone at checkout — with a cloud-based mobile application like LevelUp or Square Wallet, or with near-field communication (NFC), as used with Google Wallet.

LevelUp, for example, links the cloud-based app to a bank or credit account. You make payments by hitting a button on your phone or displaying a code for the cashier to scan. You can also make payments this way at many stores using PayPal. In contrast, with apps like Google Wallet, you pay from the account you choose simply by tapping the phone on a NFC terminal.

  1. Money is just the beginning – Mobile wallets should really be called mobile handbags because many of them have capabilities that go way beyond storing monetary data. For instance, you can automatically redeem discounts stored in Google Wallet when you tap your phone to pay at some retailers. Other mobile wallets store loyalty cards and rewards cards, as well.
  1. Your data is just as vulnerable – A common misconception is that mobile wallets are much safer than carrying a physical credit or debit card because of theft or post-purchase data breaches. In reality, when you use a credit or debit card through your phone, the same fraud protections you get with a plastic card applies, said Marianne Crowe, vice president of payment strategies for the Federal Reserve Bank of Boston, to Kiplinger’s Personal Finance.

In an attempt to safeguard yourself from imminent threats, look into apps or mobile carrier services that disable your phone in the event of theft, place a password on your phone’s home screen and use unique PINs for each of your accounts. 

  1. Adoption is still limited – Even if you are a consumer who is a firm believer in mobile wallets, not all merchants have the technology to accept said payments just yet. In fact, a limited number of retailers accept mobile transactions at all, and those that do may or may not support your preferred method of mobile payment. Widespread and uniform adoption is still a long way off.
  1. Don’t ditch your pocket-worn leather bi-fold just yet – Because of the inconsistencies in the marketplace, consumers are still generally satisfied with their low-tech wallets and should expect to be keeping them for a few more years.

Tech experts are predicting that swiping or tapping a phone to make purchases will become mainstream over the next decade,” wrote Kiplinger’s Associate Editor Lisa Gerstner.

Plus, even if your coupons and discount cards can be stored in your phone, the technology has not been invented to digitize your driver’s license, and a couple paper checks on hand is never a bad idea in case of emergency. So, even though in, say, 10 years, a smartphone could replace your entire wallet, that doesn’t mean that it should.


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