With the embrace of smart mobile devices, digital wallets have grown popular. Also known as e-wallets or mobile wallets, these apps store payment information virtually. The convenience is undeniable; the question is whether digital wallets are safe to use.
Popular examples of digital wallets include Apple Pay, Google Pay, Samsung Pay, PayPal, Venmo, Alipay, WeChat Pay, and others. A digital wallet can store:
- credit card details;
- bank account information;
- store loyalty cards;
- tickets;
- cryptocurrencies;
- other virtual assets.
This enables online purchases, money transfers, bill payments, and in-store payments, all done through mobile devices. Plus, you don't have to manually enter the payment details each time.
Many digital wallets use near-field communication (NFC) for contactless payments. When you tap your smartphone or smartwatch on a point-of-sale device to pay, you’re taking advantage of NFC.
Digital wallets allow people to travel light. Integrating them with food delivery and ride-share apps can simplify those payments, too. And you no longer have to worry about a thief getting their hands on your credit or debit card.
Still, consider the pros and cons of trusting a digital wallet application.
Weighing Up Digital Wallet Security
On the plus side, digital wallets use various security measures. These can include:
- encryption, which converts your data into random code in transit and storage;
- biometric authentication, such as fingerprints or facial recognition;
- tokenization, which replaces your payment information with non-sensitive data.
At the same time, there are risks. For one, NFC works wirelessly. This means there’s always a chance an attacker could intercept your payment once you authenticate it. They’d need to be near your device to access the information, but it’s possible.
Using a digital wallet application also means you’re relying on technology. Malfunctions could happen. Additionally, it's possible someone could hack the digital wallet app.
Cybercriminals typically target cryptocurrency digital wallets in the hope of accessing large holdings. Nevertheless, other digital wallets are also at risk.
Still, a physical wallet also risks theft and exposing your financial information. So, there’s no real reason to avoid digital wallets altogether. Instead, take precautions.
Secure Your Digital Wallet
Protect your digital wallet and financial information by taking the following steps:
- Download digital wallet apps from official app stores or reputable sources only.
- Regularly update digital wallet apps.
- Use strong passwords or biometric authentication for your digital wallet.
- Enable two-factor authentication when possible.
- Secure the devices linked to your digital wallet and financial information.
- Review your transaction history and statements to detect any unauthorized or suspicious activity.
Digital wallets can be a safe and secure way to make payments. Follow these suggested precautions and be mindful of potential risks.
