Compare digital wallets

They're described as the future of payments, but digital wallets can also make your life easier in many other ways.

Managing your credit card, debit card, cash, loyalty cards, business cards, insurance cards, IDs, train tickets, event tickets and receipts could be easier with a digital wallet. Our guide will take you through how they work, their pros and cons and how to compare them to make sure you choose the one that best suits your lifestyle.

What is a digital wallet?

A digital wallet lets you make electronic payments with your credit card or digital cash and hides the actual credit card information that is used to make the payment. By authenticating your transaction with encryption, the payment process is secure.

But that’s far from the only thing a digital wallet does. It can also take the functions and content of your actual wallet and integrate them into a digital device. This digital device could be something like your mobile phone or computer, with apps and in-built functionalities to help you with your everyday transactions. Some examples of accounts that connect with digital wallets are Starling, Revolut & Monzo as well as standard current accounts.

What are the types of digital wallets?

In this new space many tech companies are developing more and more digital wallets. Here are the ones dominating the UK market so far:

Apple Pay

For additional convenience and security with Visa, Mastercard and American Express debit and credit cards, you can use your iPhone, Apple Watch, iPad or Mac to pay for purchases. Use it in store by simply holding your phone near the card reader and placing your finger on Touch ID.

However, its main functionality really shines online, with the Safari browser, where you can now buy without needing to create a website account or give away any personal information. Your card number is not stored on your device or the Apple servers, letting you shop with added security.

Samsung Pay

Samsung Pay is like Apple Pay, but designed for Samsung devices. You can link your debit or credit card to the Samsung Pay app, then use the app to make purchases instead of using your physical plastic card or cash. The app generates a unique payment code each time you make a transaction, meaning no payment data is stored or held in the app and your bank card details aren’t shared with the merchant.

The app uses Near Field Communication (NFC) technology to communicate with the EFTPOS terminal. This means you can simply hover your phone or smartwatch over the payment terminal to pay for something.

Google Pay

Like Apple Pay and Samsung Pay, this app is Google’s digital wallet solution. It can work on all Android devices, and isn’t limited to Samsung. Google Pay also uses NFC technology to communicate with a payment terminal, allowing you to make purchases with just your phone or Google, smartwatch or wearable device.

PayPal

PayPal is the middleman for online payments for many online retailers, including Ebay. It gives the ability for you to make quick, simple and secure purchases with your existing PayPal account which you link to your transaction account or credit card. You can also earn reward points if you link the appropriate credit card with your PayPal account. Through a partnership with Bling Nation, PayPal also uses NFC.

Masterpass

Masterpass is Mastercard’s digital wallet that lets you make your everyday purchases by tapping your enabled device. It is fast and safe with zero liability which means that if you can prove that the transaction is fraudulent then you won’t be charged. It is accepted globally at many merchants.

V.me by Visa

Like PayPal, V.me by Visa makes online payments easy when you shop online whether you’re using a computer, tablet or mobile phone. You can pay on any website where V.me is accepted without re-entering your credit card information again and again. Shop online securely without needing to share your financial information and link it with any major credit card or debit card.

Stocard

An app for bargain hunters, and those who want to become one. Stocard lets you carry loyalty cards in your smartphone or smartwatch, free of charge and without any registration required. Just download the app, spend a few seconds adding any existing loyalty cards to your Stocard wallet, and you can carry the discounts with you wherever you go.

Jargon Buster

Title

  • Near Field Communication (NFC). This is a set of features for smartphones and similar devices to establish a communication by bringing two of them together. Applications include contactless transactions, data exchange or a form of complex communication.
  • Radio-Frequency Identification (RFID). This technology is the use of radio-frequency to transfer data and information.
  • Encryption. This is way of encoding messages so that no one but only authorised people can understand it. It is encrypted using an algorithm which is used to hide the original message.

How does a digital wallet work?

Essentially a digital wallet works like an electronic version of your current wallet. It lets you make electronic payments with your digital device and hides the actual financial information. It authenticates your purchases through encryption and digital certificates to secure the payment processes from the consumer to the merchant.

Most payments will use NFC, a technology that allows radio frequencies to communicate with each other. In the future, you can expect the following features to be available with your digital wallet:

  • Online shopping your from your device
  • Conducting comparison between items
  • Paying your bills
  • Earning points with all of your reward programmes
  • Storing personal information
  • Person to person payments
  • Connect with appliances within the household

The many ways to send money through your phone


How do I compare digital wallets?

digital wallets should be a personalised portal for you, so you may want to consider the following features you should expect from yours.

  • Security. Make sure your digital wallet has a number of security measures in place such as encryption for every transaction, zero liability protection or some insurance for your purchases. Safeguards should also be in place to only bill you once if you tap twice by mistake. Consider setting up a username, password and PIN.
  • Payment method. Your digital wallet should use NFC for easy payments that are quick and convenient. You may also be able to pay your friends and family easily by bumping your devices together or electronically transferring funds. The digital wallet should be able to make bill payments on behalf of the user and schedule any bill payments when they’re due.
  • Online shopping. If you regularly buy online, it may be a good idea to use a digital wallet that is accepted at your favourite online retailers. You can avoid entering your credit card details every time you buy on the Internet and instead just enter a username and password. Check the merchant or partners page of the digital wallet to find out what they are.
  • Rewards. You may be able to link your rewards programme with your digital wallet, so it can give you real time reporting of thow many points you’ve accrued so far. If you’re a member of multiple rewards programmes, remember to link them all to your digital wallet.
  • Organiser. Your digital wallet could store your calendar, contacts, tasks, lists and personal information, allowing you to access them at anytime. This makes it easier to update and retrieve the information you need when you want to , as well as easily sync your information to all your devices.
  • Technology. Contactless payments are the new standard for digital wallets and facilitate things like PayPass or PayWave. They use Radio-Frequency Identification (RFID) tags to add a security layer that lets secure transactions through an enabled device. New digital wallets could incorporate things like computer chips and Point of Sale (POS) device that provide a better and smarter shopping experience for you.
  • Financial institution. Many banks and other financial institutions are integral to the digital wallet movements as they facilitate your payment. Yours may already have an app available, which will make your digital payments easier as they already have your account information.

What are the pros and cons of digital wallets?

Pros

  • Smarter than your regular wallet. digital wallets can provide a better experience for you, as well as help you organise your finances. You can also keep coupons without bulking up your wallet.
  • Easily manageable. Manage both your notes, coins, forms of ID and any other cards by having it all in one place. It’s also easier to locate all your lost items if you ever lose your wallet and you can reduce the chance of theft as you need to only worry about one thing.
  • No fees. Electronic payments eliminate the need to go into a branch to do your banking. This also means you can save on fees such as service charges, overdraft fees and pay minimum prepaid card fees.

Cons

  • New technology. In the present, digital technologies are still misunderstood and haven’t reached a critical mass among consumers. This means that not every merchant will have contactless payment methods, so you might not be able to use your digital wallet everywhere you go.

What are some things to avoid with digital wallets?

  • Forgetting about security. Always protect your information with a password or PIN just in case your digital wallet is lost or stolen. It’s important that you can always unlink your personal information from your digital wallet so no one except for you has access to it.
  • Forgetting about privacy. To avoid things like identity theft, you must always be wary of the site you’re entering your personal information into. If you’re on a webpage, always look for the padlock symbol where you enter your web addresses to confirm that the web page is secure.

Bottom line

From online shopping and paying your bills, to storing personal information and earning you points on rewards programmes, a digital wallet could save you time and money. Do your research before you choose the one that’s best for you and remember to always protect your privacy and personal information.

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