Difference Between Digital Wallet vs Credit Card 2023 (2024)

FAQs

Difference Between Digital Wallet vs Credit Card 2023? ›

For one thing, digital wallets are entirely virtual, meaning payment information is stored digitally and relies on a computer or mobile device with an internet connection. Credit cards, on the other hand, can be either virtual or physical.

In general, digital wallets are considered much safer than using physical credit cards, which can be more easily lost or stolen. When you lose a physical card, anyone who finds that plastic might be able to use it before you realize it's missing and prior to attempting to cancel it with the card company.

The main difference is in their design. A traditional credit card shows your account number, CVV code and expiration date clearly printed on its front and back. A virtual credit card exists only in digital format, without a physical presence.

While it's too early to say that plastic cards will completely disappear, the trend is clear: digital payment methods are becoming increasingly popular because they are convenient, secure, and more environmentally friendly.

Digital wallet advantages are many: They can be used online as well as in-store; are fast, secure, convenient; and a financially savvy way to purchase goods and services across the board.

When using a digital wallet for payments, transaction data may be tracked, leading to privacy concerns about the security of personal information stored digitally. The idea that third parties could track and analyze your financial behavior is a significant privacy concern for many users.

Digital wallets are neither better nor worse than credit cards, merely different. However, just as one credit card may be better than another for the cardholder's unique needs, some digital wallets may have more attractive features and functionality, depending on the user's preferences and objectives.

Digital wallets are most commonly used to store payment methods such as debit and credit cards, but they can also hold a wider range of digital items, including: Gift cards. Driver's licenses. Plane tickets and boarding passes.

Security of a digital wallet

Unlike your physical wallet, you can use settings on your mobile device to add an extra layer of security for your personal information. And it's harder for someone to use cards on your smartphone than it would be if they just found your wallet full of credit cards on the street.

A virtual card is stored on your phone and can be used to pay in stores or online. It has its own unique card number, expiry date, and CVC. A digital card is a copy of your physical bank card that's stored on your phone. Digital cards have the same card number, expiry date, and CVC as your physical bank card.

Are physical cards going away? ›

The biggest change coming for Americans will be the ability for banks to issue one physical payment card that will be connected to multiple bank accounts. That means no more carrying, for example, a Bank of America or Chase debit card as well as their respective credit cards in a physical wallet.

Although banks claim that RFID chips on cards are encrypted to protect information, it's been proven that scanners—either homemade or easily bought—can swipe the cardholder's name and number. (A cell-phone-sized RFID reader powered at 30 dBm (decibels per milliwatt) can pick up card information from 10 feet away.

Make a foil shield.

This is the “low-tech” way to go, but it's cheap and easy. Cut two pieces of paper or cardboard into the size of a credit card, wrap each piece with aluminum foil, and carry them in your wallet around your credit cards. The aluminum will disrupt most electronic signals.

Digital wallets allow you to pay when you're shopping using your device so that you don't need to carry your cards around. You enter and store your credit card, debit card, or bank account information and can then use your device to pay for purchases. Digital wallets can also store: Gift cards.

Apple Pay and Samsung Pay are examples of device-based digital wallets because they require paying using an iPhone, Apple Watch, or Samsung phone. Google Wallet and PayPal both offer apps that can be added to compatible phones, allowing them to be used as device-based digital wallets in store.

In addition to the convenience factor, digital wallets offer heightened security. You don't run the risk of leaving a credit card behind. All important financial details are fully encrypted and only accessed with your personal password, PIN, or biometric details.

Contactless payments are not only convenient, they're also more secure than swiping your card. When you add a payment card to Google Wallet, it creates a device-specific virtual account number, known as a device token, so your real card number isn't stored on your device or shared with merchants.

Apple Pay is safer than using a physical credit, debit, or prepaid card. Face ID, Touch ID, or your passcode is required for purchases on your iPhone, Apple Watch, Mac, or iPad. Your card number and identity aren't shared with merchants, and your actual card numbers aren't stored on your device or on Apple servers.

A really cool feature of mobile wallets is that your actual credit card number won't be transmitted when you use it to pay. Instead, your mobile wallet will generate a unique encrypted number instead, saving you from the possibility that a skimmer embedded in a credit card reader is capturing your credit card number.

Virtual credit cards can make online shopping more secure. It's considered a safe payment option that puts an additional barrier between your credit card number and identity thieves.