A mobile wallet is a way of taking your money with you without actually having to carry cash, credit cards, or a checkbook. Your funds can be on hand by simply having your phone available. A credit card mobile wallet is like using your phone as a credit card, and you’re able to make payments and charge things without having to physically carry a wallet around.
With a mobile wallet, all personal information and account numbers are encrypted so that it’s hard for cybercriminals to hack your data, intercept payments, or do anything that would jeopardize your mobile wallet finances. Having a physical wallet on hand means that debit or credit cards can be stolen or lost, but with an encrypted credit card mobile wallet, there’s very little chance that anything could be accessed.
After a mobile wallet is installed on their device, the customer has to provide all their banking data, such as a credit card number, corresponding rewards cards, and so forth. From there, their personal information will reformat into something that’s transmittable—something someone can scan or that is “readable” by other devices, like a QR code—as a way to confirm the customer’s identity.
Online payments will still be processed in the normal way, but in-store purchases will change. Now, when you approach a cash register in order to pay for an item, near-field communication (NFC) technology makes it so digital devices can “talk” to each other and transmit data and information. With a mobile wallet, the NFC uses the QR code (or other form of identification) to process the purchase at the payment terminal. Generally, in order for the mobile wallet to communicate with the other device, the customer needs to tap their app or physically wave their mobile wallet over the point-of-service terminal at the merchant’s counter.
Are There Different Types of Mobile Wallets?
In principle, the idea is the same, but there are a few different names for certain features that a mobile wallet might offer, such as access to cash or special relationships with certain businesses or merchants.
Open Wallet
This form of a mobile wallet is linked directly to a financial institution or a third party. Some of the most common include Apple Pay, Google Pay, Android Pay, and PayPal. An open wallet allows a customer to use the money in this type of mobile wallet to pay for transactions, or they can even access cash by withdrawing the funds. Using PayPal as an example, customers are able to make payments both online and in-store for items from this wallet, and they can still access the funds by withdrawing it as cash.
Closed Wallet
A closed mobile wallet means that it’s linked to specific merchants and funds can only be used in order to make a payment or transaction with the particular merchant. Customers cannot take the funds out in cash, and they aren’t able to use for transactions with other merchants beyond the specific ones. A good example of a closed wallet is Amazon Pay.
Semi-Closed Wallet
Somewhere around the middle ground is what is referred to as a semi-closed wallet. This form of mobile wallet lets customers access the money in the wallet to pay for transactions with numerous merchants, so long as these merchants have an existing contract in place between them and the mobile wallet company. With this variation of a mobile wallet, customers can also move funds into a bank account. It doesn’t, however, enable customers to withdraw the funds in cash.
Setting Up and Using Your Mobile Wallet
Select Your Preferred Mobile Wallet Type
Once you’ve decided which option is best for you, you can start setting up the mobile wallet in order to make payments. First, download the mobile wallet app to your phone, tablet, or other device. Once it has successfully downloaded, open it and begin adding all the information required for setup. Beyond just debit and credit cards, you can also add rewards, coupons, or other things to the mobile wallet.
Even though you have input the information for multiple cards, only one will be designated to be run as a default for purchases. If you want to switch to another card instead of the one set as the default, you’ll have to change the default before making any payments.
For all the in-store purchases, you’ll want to locate merchants that are compatible with the payment gateway you’ve chosen. Generally speaking, in order to confirm that your mobile wallet is accepted as a form of payment, you just have to see if there is a contactless payment indicator (it looks like a little phone-in-hand next to a sideways Wi-Fi symbol), usually found at the entrance to the store or next to the cash register.
In order to make a payment, you just need to gently tap or wave your device at a signal, and that will communicate to the NFC-enabled terminal to go ahead and process the transaction. The cashier will then hit a button on their side that acknowledges the intent to make a payment, and the funds will be transferred from the customer to the merchant, completing the transaction.
A Safe, Secure Option
Setting up and using a mobile wallet will allow you to use your credit card without actually having to always carry it, pull it out, and swipe it, or hand it over to a merchant to swipe. A mobile wallet is a secure way for you to be able to make payments without having to carry a physical wallet with you.
If you’re interested in finding out more about the different types of mobile wallets or setting yours up today, the knowledgeable experts at Rivermark Community Credit Union can help you take a look at your options.
