How we buy things has changed! Recently, swiping or inserting a physical credit card seemed so normal just a few years ago, but these days folks are lining up by the millions to replace their wallet with something called “a smartphone”. There are digital wallets (e.g., Apple Pay, Google Pay, Samsung) today that have made the transaction easier than it was ever before. Yet, this ease of use raises an important question — do digital wallets provide more security than traditional credit cards?
How do digital wallets work, what security measures can you expect from them and are they really a safer method of payment?
1. How Do Digital Wallets Work?
A digital wallet is basically a place where you can keep your payment info on your phone and use it to make purchases (sometimes all you have to do is tap!). While with a traditional card POS payment is accomplished through physical cards, digital wallets use Near Field Communication (NFC) or QR codes to make payments instant.
Traditional cards need to be swiped or inserted and a PIN must also be entered; this physical contact is dispensed with by digital wallets, speeding up the process of transactions (and consequently vulnerability), while slashing instances of threats.
2. Advanced Security in Digital Wallets
The most occurring advantage of using digital wallets to be its security. Rather than magnetic stripe or EMV chip on traditional credit cards for authentication, digital wallets include a number of advanced security features:
Encryption and Tokenization
The real card details of your card is also not saved in the digital wallet. Instead it assigns a random generated token for each transaction. So if a malicious actor somehow intercepts the transaction data, they do not get your actual card number.
Biometric Authentication
Digital wallets, unlike physical cards that can be misplaced or stolen, necessitate biometric endorsement (fingerprint identification as well facial recognition and iris scan) at the point-of-purchase to confirm a charge. This makes fraudulent transactions even more challenging.
One-Time Use Codes
As purchases are made a single use code is also generated by the digital wallet. And as a result, your card details are never shared with the merchant and less fraud can take place.
Remote Lock and Erase
Lose your credit card and anyone who picks it up can try to use it. But, should you misplace your phone there are built-in securities that offer a device lock or wipe using something like Apple’s Find My iPhone (iOS) or Google’s Android Device Manager.
3. Dangers of Having a Real Credit Card
Digital wallets are designed to counteract the following weaknesses of credit cards, which have been around for decades:
Card Skimming
When you swipe your card, skimmers on ATMs or gas station pumps can capture those details [sic] This eliminates the possibility of skimming which arises when a card is swiped or inserted in an untrustworthy POS machine.
Lost or Stolen Cards
If you lose your credit card, someone may be able to use it; especially since contactless payments require no PIN for transactions below a certain threshold.
Data Breaches
If you enter your card details into online shopping sites, and the site experiences a security breach then to hackers those information is just as good as cash on hand. One reason is that digital wallets minimize risk by performing tokenized transactions.
4. Is there a possibility of the hacking of digital wallets?
As digital wallets are more secure than your physical wallet but none of the systems is foolproof. Some potential risks include:
Phishing Attacks
Fraudulent emails or messages help hackers that may claim to be from real companies are another technique used by the attackers which will attempt tricking into users with fake login and password.
Weak Security = Device Theft
If your phone has no biometric authentication or a strong password, then someone who manages to steal that will be able also access wallet.
Public Wi-Fi Threats
If your data is intercepted on the way by these hackers, they will have smartly stolen it.
As with all solutions that store any personal information of yours, to minimize risks users should always register and configure incognito mode for biometric authentication; confirm password strength as well remaining at the highest level and avoid entering 소액결제현금화details over any chain or public Wi-Fi connection.
5. Zoom into to see the Future of Payments: Digital vs. Physical
The Preferred method of payment for millions worldwide, as the technology is taking a sharp curve when people are adopting digital wallets. In the world of modern financial services, digital payments are more and important — as contactless transactions becomes a average limit feature for secureelfinance finance.
A few of the trends that make digital wallets a more secure choice include:
- Increased merchant acceptance – There are more businesses today supporting mobile payments.
- State-of-the-Art Fraud Prevention – AI-Powered fraud detection systems are so amazing that they get better daily.
- Integration with other financial services. — Digital wallets are additionally being embedded into Cashflow analysis and budget planners
And, a digital wallet helps to keep the transactions as smooth with real-time notifications and an instant tracking of expenses etc.
6. So, Which Is Safer?
A digital wallet is more secure in comparison to a traditional credit card for two main reasons, as far as this article goes —
Encryption and Tokenization To Reduce CHD Exposure And Fraud Risk
More secure through biometric authentication
The possibility to lock or erase previously lost devices from a distance
Nevertheless, some care should also be taken when using digital wallets. Protect your phone with a password that is virtually impossible to crack, stay far away from these malicious sites for every day , and be sure to familiarize yourself with the latest security threats.
Bottom Line: Is a Digital Wallet Worth the Switch?
If the most important aspect for you is security, a digital wallet would be ideal. In fact, with the encryption and tokenization technology along with biometric security it is much more difficult for a fraudster to get access to your money than someone using an old fashioned credit card.
However, as always users should take care even when they pay online or offline. Whether or not you are using a digital wallet for payment, the best shield against fraud is staying informed and applying security to your accounts.
With that said, if these steps are used as a guideline to follow then digital wallets can provide easier payments in addition to being more secure for your finances with the way things work now.
