Using Mobile Payments and Digital Wallets
If you’ve seen someone hold their phone or smartwatch near a checkout terminal and complete a purchase in seconds, that person was likely using a digital wallet. Digital wallets are becoming an increasingly common way to pay. If you haven't used one before, you may have questions about how they work.
What Is a Digital Wallet?
A digital wallet is an app or feature on a smartphone, smartwatch or other compatible device that allows you to securely store digital versions of eligible payment cards. Popular examples include Apple Pay, Google Pay and Samsung Wallet. Instead of pulling a physical debit or credit card out of your wallet, you can use an eligible device to make purchases.
How Do You Add a Card?
Setting up a digital wallet generally starts with opening the wallet app on your device and adding an eligible debit or credit card. Depending on the wallet, you may be able to enter the card information manually or use your phone's camera to capture it. Once the card is successfully added, it can be selected as a payment option from your digital wallet.
What Happens When You Tap to Pay?
When you're at a store that accepts contactless payments, you can generally open or activate your digital wallet, select a card if needed and authenticate the purchase using a method such as facial recognition, a fingerprint or your device passcode. Then, hold your phone or other compatible device near the contactless payment symbol on the terminal.
Behind the scenes, your device communicates with the payment terminal using technology called Near Field Communication, or NFC. Instead of simply providing your physical card number to the merchant, supported digital wallets use security technology designed to protect your actual card information during the transaction.
The payment is then processed through the payment network and sent to your card issuer for authorization, much like a purchase made with your physical card. Once approved, the transaction is completed.
Where Does the Money Come From?
The digital wallet is simply another way to use a payment method you have added. For example, if you use a debit card in your digital wallet, purchases are connected to the checking account associated with that card, just as they would be if you used the physical debit card. If you use a credit card, the purchase is charged to that credit card account and will appear with your other credit card transactions.
Are Digital Wallets Secure?
Digital wallets include several layers of security designed to help protect payment information. Depending on the wallet and card, these may include tokenization, encryption and device authentication.
Tokenization is an important part of many digital wallet transactions. Rather than transmitting your actual card number during an eligible transaction, a unique digital identifier, or token, can be used to help process the payment. Your device may also require you to authenticate yourself with a fingerprint, facial recognition or passcode before a payment can be made.
These protections don't eliminate every risk. It's still important to use a strong device passcode, keep your phone's operating system and apps updated, monitor your accounts regularly and know how to remotely lock or locate your device if it is lost or stolen.
Why Use a Digital Wallet?
Digital wallets are simply another payment option. You can continue using your physical debit or credit cards where accepted. For customers who choose to use them, however, digital wallets can offer a convenient way to pay without reaching for a physical card. They can be particularly useful when you're already carrying your phone or wearing a compatible smartwatch.
Ready to Give It a Try?
If you have an eligible debit or credit card and a compatible device, setting up a digital wallet only takes a few minutes. Start by opening the wallet app on your device and following the instructions to add your card. Whether you use a digital wallet every day or simply want another payment option when you’re on the go, understanding how the technology works can help you use it with greater confidence. It’s one more convenient way to access the cards you already rely on, right from the device you carry every day.