Digital wallets have become more of a popular option for many consumers nowadays with the further innovations in technology. If you don’t know what a digital wallet is, it is simply a cashless payment system that stores a user’s payment information and allows that user to make transactions through their devices, without the need for swiping a debit or credit card. Developers of these digital wallets have added a variety of features to meet the demands of customers and try to stand out from the competition.
What Is a Digital Wallet and How Does It Work?
As mentioned above, a digital wallet is simply made to work one of two ways. One way of using it is as a banking platform to send and receive money as well as make purchases on the internet. The other method of using this tool is to use your mobile device, tap the phone on the payment terminal of participating stores to pay for a purchase.
To process the payment, the system instantly withdraws the purchase amount from the bank account or a debit or credit card designated when setting up the digital wallet. Other systems let users keep cash or cryptocurrency in their digital wallets and then use that money to pay for purchases. Depending on the terms of service, users might pay a fee for using the service.
Are Digital Wallets Safe To Use?
People who first hear of digital wallets wonder if they are safe to use. To answer this question simply, it is safer than many people think. Although your digital wallet is linked to your bank account, the merchant never sees the account number. Instead, the system creates a unique, random transaction number for purchases. Your account information is encrypted and available only to people with a password.
Before deciding to use a digital wallet, be sure you take care to protect the information you have stored electronically. Your smartphone has features such as the built-in safeguards like biometric access from the lock screen. Your phone will then ask for your fingerprint or scan your face before opening. The best digital wallet apps are compatible with multiple platforms and offer a variety of features. Review the ones below to see which is the best for you.
Apple Pay
Apple Pay is a service available to users with an Apple device, including iPhone, iPad and Apple Watch. Users can pay for goods and services in physical stores, in the App Store, on websites and through text messages using touch ID or facial recognition. There are no fees to use the service unless you want to instantly transfer money from the digital wallet to your bank account.
Google Pay
Known before as Google Wallet, Google Pay offers the same functions and features by allowing users to send and receive money free of charge to anyone with an email address or phone number and pay for purchases at a point of sale as long as they have a near field communication-compatible device. They offer this app as a smartphone and tablet app and also works on desktops. All you have to do is sign into your Google account and add a payment method.
PayPal
Not only is PayPal a payment option online but it is also considered a digital wallet. It is available on the company website and a mobile app. This platform works on both Apple and Android devices. All you have to do is link your PayPal accounts with your checking accounts to have the option of paying from their PayPal balances or bank accounts. With PayPal Purchase protection, buyers can be reimbursed if they don’t receive the item they paid for.
Samsung Pay
More merchants accept Samsung’s digital wallet than any other mobile digital wallet service, the company reported. The mobile app is available through the Google Play store and works on select Samsung devices. Before downloading the app, verify that your device is compatible with the system. In addition to paying for goods and services online and in stores, you can store membership and rewards cards in the wallet so you can save time and money at checkout.
Venmo
Founded by PayPal, Venmo is a very popular digital wallet used by many to send and receive money. Users link their Venmo accounts to their debit card or bank accounts in order to make the money transfers possible. One features that makes this digital wallet stand out is the way it allows groups to interact on the platform. Enjoy the ability to share your purchases with your real friends and let them comment on them. The service is free to use if you send money from your Venmo balance or withdraw cash at an in-network ATM.
Zelle
Zelle allows users to send and receive money to each other through their banks and credit unions. This service is free, but some financial institutions charge their own fees for processing the transactions. Because of this, the company recommends that users check with their bank or credit union before assuming they won’t incur extra charges. Zelle is a smartphone app that also is present through other online banking services provided by partner banks and credit unions.
Cost and Compatibility of Popular Digital Wallets
Below is a list that compares the cost and compatibility of each different digital wallet and how they stack up with each other.
Apple Pay
- $0 to send or receive money
- Available on: iOS
Google Pay
- $0 to send or receive money
- Available on: Android, iOS, desktop
PayPal
- $0 for standard transfer money to bank account
- 1% of amount transferred for instant transfer
- $0 for payment funded by PayPal balance or linked bank account
- 9% of payment when funded by credit or debit card or PayPal credit
- 5% transaction fee for international payments
- Available on: Android, iOS, desktop
Samsung Pay
- $0 to send or receive money
- Available on: Select Samsung devices
Venmo
- $0 to send or receive money
- $0 for standard withdrawal
- 1% for instant withdrawal
- $2.50 to use out-of-network ATM
- 3% of payment funded by credit card
- Available on: Android, iOS, desktop
Zelle
- $0 to send or receive money
- Available on: Android, iOS, through bank apps
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Bottom Line
Digital wallets provide an easy-to-use method of paying for your things. In only a few minutes, you can order groceries from a supermarket, pay a friend for movie tickets and buy a new outfit from an online retailer. The largest digital wallets with the most features will actually let you store rewards accounts in the wallet so you don’t’ have to hold onto your plastic card! For more post like this, check out our list of bank guides!
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