Can I replace my physical credit card with my smartphone?

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As the use of digital wallets increases, contactless technology may become the default choice over carrying physical credit cards.

Key Point

• A digital wallet allows you to keep a virtual copy of your payment card on your mobile device.
• Peer-to-peer payment apps allow you to send and receive money from your linked payment accounts.
• The ongoing pandemic has increased the need for contactless payment options.

We’ve come a long way since the 1990s when mobile phones first became a popular accessory. With each advancement in technology, smartphones have become less of a luxury and more of a central part of our lives.

Digital wallets and P2P payment apps are gaining popularity these days. This is partly due to the pandemic and the increasing need for contactless payments. A 2021 study by Visa found that 74% of small business owners surveyed expected consumers to continue to prefer contactless payments even after the widespread release of the COVID-19 vaccine. A recent Chase survey echoed a similar sentiment, with 73% of respondents agreeing that contactless payments are more convenient than other payment methods.

But will your phone replace those plastic (or metal) credit cards you carry around in your wallet or bag?

Smartphone payment technology

Every week or every month there is a new way to access or spend money using your smartphone. Here’s a look at some of the technologies that have become more popular as contactless transaction options among consumers over the past few years.

digital wallet

A digital wallet (mobile wallet) allows you to add payment card information to your mobile device for in-store and online payments without the need for a physical credit or debit card. It essentially turns the smartphone into a wallet, eliminating the need for individuals to carry cards around.

To use your digital wallet, simply add your information to the wallet of your choice on your mobile device and open it at checkout. The process will vary depending on which digital wallet you use. At checkout, you may need to pull up and scan a QR code or tap your phone to a contactless payment processing device. Digital wallets create contactless payment opportunities instead of swiping or inserting physical payment cards.

Digital wallets include:

• apple pay
• Google Pay
• samsung pay
• Fitbit Pay
• garmin pay

Peer-to-peer payment apps and other digital payment options

Peer-to-peer (P2P) payment apps have become a staple of our daily lives, making it easy to send and receive money between friends, family and businesses. These apps allow you to send funds to other users almost instantly via linked bank accounts and credit cards. P2P payment apps include:

Restaurants such as Starbucks and Chick-fil-A have also entered the digital payment space by adding payment cards directly within their mobile apps. Instead of pulling out your credit card and enjoying a pumpkin spice latte, simply open the Starbucks app and scan your card or prepaid gift card.

Some credit card issuers now offer virtual card numbers so consumers can shop online without revealing their credit card number. When you make a purchase, your card issuer will generate an alternate card number to protect your information as an extra level of protection.

The “buy now, pay later” service has also replaced using a credit card for online purchases. These installment loans allow you to buy online, pay a portion at checkout, and split the balance into several equal payments.

Can I replace my physical credit card with my smartphone?

Some individuals will probably still prefer to use “real” cards or cash to pay for purchases, but depending on the device, setting up your smartphone to handle most of your financial transactions in life It seems that credit and debit cards can be replaced through digital wallets, P2P payment apps, automated money transfers, and virtual card numbers.

Advantages and disadvantages of smartphone payment

We love technology, but using mobile phones to conduct financial transactions has both advantages and disadvantages.

Strong Points

• comfortable: Mobile phones are more convenient than pulling out wallets, facilitating contactless transactions.
• safety: Digital payments use data encryption and other security measures to protect your information.
• Multiple options: There are several digital wallets available today, so there will likely be one that fits your needs.

Cons

• Options may be limited. Some digital wallets and other payment services are available, but may vary depending on your mobile device’s operating system and manufacturer.
• waste: Removing the physical act of pulling out a credit card at a store could encourage some consumers to shop more impulsively.
• price: Some digital wallets may charge fees for using their payment services.

Should I throw away my credit card?

Even if you switch to using your smartphone for all payments, don’t throw or shred those credit cards. I don’t know when I will need it. Especially if your phone is lost, stolen or damaged, or if you’re temporarily unable to retrieve your wallet. Technology isn’t perfect, so it’s a good idea to keep a physical card handy.

You don’t necessarily have to carry it with you all the time. You can store your socks anywhere in your home. Also, protect yourself and the information stored on your phone from misuse of your payment information.