Every few years, I give my husband a new wallet for Christmas. This year, however, I'm wondering if I should get him a digital one instead.
A digital wallet is an app or online service on your electronic device that allows you to make purchases and transfer money. Some digital wallets are designed to house other personal information, like your driver's license and insurance cards. Although you can use your computer or tablet, most people use digital wallets on their smartphones. Whatever gadget you use, let's address the pros and cons.
Security. It seems like we hear about the hacking of a major retailer or bank every week. So why compound the problem by putting all that personal information on your phone? Digital wallets are safer than many other payment methods. Instead of using your credit card or checking account number as an identifier, a random token number is assigned to your transaction, so the retailer never even gets to see your information. If your phone gets stolen, the thief can't gain access to your digital wallet unless he has your password. (Newer smartphones offer fingerprint authentication, as well.)
[Related: MOAA members qualify for a 20-percent discount on an Identity Guard membership. Learn more.]
Convenience. Deemed “tap and pay,” paying via digital wallet is easy and fast. You'll only have to enter your pertinent information once, during set-up, and then you'll be good to go.
Digital wallets are most popular among millennials and Gen Xers who love the convenience of not carrying a wallet and wouldn't be caught dead without their phone. No more gasping in horror at the grocery store when you realize your wallet's in your tennis bag or having to explain to the cashier that you thought you had two $20s. Active duty servicemembers also embrace the lighter load and ease of use of digital wallets.
Rewards. Companies that provide digital wallets see them as a marketing and data-gathering tool, so many offer incentives like cash back or free song downloads.
Ahead of their time? One big drawback to digital wallets is they aren't welcomed by everyone yet; many retailers haven't updated their technology to accept them. Complicating matters is the fact that the world of digital wallets is fiercely competitive. This means Apple might not let you have Samsung's digital wallet app on your iPhone, or Lowe's might not accept PayPal, so it's hard to know what will work where.
Digital wallets are an uncomplicated, secure, and sometimes rewarding way for money to change hands, but they aren't quite ready to totally replace my husband's rawhide. So I'm back to deciding - black or brown?