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Is a Mobile Wallet App in Your Future?


You’ve seen the commercials. A young man or woman goes into a cafe, buys a fancy coffee, pulls out their smartphone mobile-wallet-1.jpgand boom ... pays with their device. So that’s what a mobile wallet is, right?

Well, yes and no. Mobile (or digital) wallets let you purchase goods with a smartphone, but they do more than that. You can buy that latte electronically, or make online purchases. You can also store cards and personal documents, link to your bank and credit accounts and transfer cash. Soon, everything in your wallet will be available electronically, and the future of e-commerce will be here.

There are two types of digital wallets: client-side and server-side. Client-side digital wallets are installed and used by consumers (that’s you), whereas server-side wallets are created and maintained by a business. Server-side digital wallets are already used widely and are common ways for online businesses to track purchases and keep a database of consumer information and practices.

We’ll focus on client-side digital wallets. You begin by installing a digital wallet app and supplying your payment, shipping and other key information. The app includes security and encryption features and has a chip that enables a technology called near-field communication (NFC), which communicates with receivers in stores.

The retailer reads the information from your smartphone, taps into your bank account (or other sources, such as a PayPal account, or a credit or debit card), verifies your identity, and the purchase goes through, sending an automatic receipt to your account.

In addition to the advantages of speed and convenience, many people like the idea of downsizing their wallets by reducing or eliminating the number of cards they carry. Also, the information is backed-up and secured electronically, so in the case of theft or loss, replacement is easier. And the encryption technology used in digital wallets is actually more secure than swiping physical cards through magnetic readers.

Currently, no single app dominates the market so the “best” one will depend on what features are most attractive to you. Here are a few examples of the most widely-used digital wallets apps available today.

1) PayPal

PayPal offers a digital wallet app for both iPhone and Android that lets users make purchases using their PayPal accounts. It also provides the option of connecting to your bank account and allows person-to-person payments, where money can be sent and received from other accounts. Other features include a simple checkout process, the ability to track coupons and special deals, and the fact that it works on almost every type of phone. If you don’t already have a PayPal account, you’ll need to open one, but otherwise it requires no complicated set-up or additional hardware. PayPal doesn’t have as many bells and whistles as some other digital wallet apps but is a good option for users looking for a straightforward type of digital wallet with wide versatility.

2) SamsungPay

For Android (Samsung) smartphones, this is one of the most widely-accepted digital wallet apps available, due to its compatibility with most magnetic stripe terminals, allowing users to make payments at almost any retailer. This ease-of-use and the popularity of Android phones makes it an attractive option for some people. Some advanced Samsung smartphones even allow you to authenticate transactions through fingertip sensors. It’s allied with many major banks and credit card companies. It will limit users to certain Samsung devices but, with its high degree of acceptance by a majority of credit-card accepting retailers, it’s a good option for many users.

3) Android Pay

As opposed to SamsungPay, AndroidPay works with all NFC-enabled Android devices, using credit cards for quick payments at e-retailers and within some other apps. It’s supported by a wide range of credit card companies and major retailers, and has special-app arrangements with a growing list of both online and traditional businesses, making acceptance easy and reliable. Your credit card information is stored on your device (or in the cloud) and accessed by store-specific apps. It uses both NFC and fingerprint recognition systems. Its flexibility across any Android device offers a unique advantage that will appeal to some users.

4) ApplePay

Like SamsungPay, ApplePay is a proprietary system (it only applies to Apple products) that lets you make credit and debit card payments at participating retailers. It’s allied with a large list of banks and credit card companies, as well as with many major retail locations. Payments can be approved by your phone, via fingerprint, or with an Apple Watch. It also works on mobile commerce sites and apps compatible with Apple and allows easy upgrades when you change devices. It doesn’t currently include the ability to access retail loyalty cards and has had some growing pains associated with security and acceptance issues. However, many of these have been worked through, and for Apple users it’s an attractive and versatile option that’s been enthusiastically adopted.

5) Google Wallet

Google Wallet is compatible with both Android and iPhone smartphones, but only those at or above a certain level (iOS 6 or above, and Android 4.4 or above). For devices below those levels, users can still use the app to make transfers, store cards, and pay online. It uses the same “tap and pay” function as all the other digital wallets on this list and enjoys acceptance at millions of locations. Users can store credit, debit, gift cards, and loyalty cards and purchase goods through their smartphone, tablet, or desktop computer. Since its release several years ago, Google Wallet has worked through some early challenges with retail compatibility, but growing availability of e-commerce and point-of-sale technology has mostly resolved them, and it’s likely only to keep expanding.

The Bottom Line: Mobile wallet apps aren’t just for “early adopters” anymore. Market researchers expect to see a huge increase in mobile payment transactions in the coming year, and with both rapidly changing attitudes and technological advances, you might want to look into whether a mobile wallet is a good choice for you.