Chase Alumni Association

#10  Mobile Payments/ 

        Digital Wallets        

           

(March 2025)    

 

 

If you've been eyeing people confidently tapping their phones at checkout with a mixture of curiosity and suspicion, you're not alone. Many of us grew up in the "swipe and sign" era and have watched payment technology evolve with the wariness of someone who still remembers when "the cloud" just meant rain was coming. This month's article is for everyone who's wondered if their phone might accidentally buy a yacht if they walk too close to a marina, or who thinks "tokenization" sounds like something from a sci-fi movie.

What exactly is a digital wallet and how is it different from my regular banking app?

In simple terms, a digital wallet is like a virtual version of your physical wallet, where you can store digital versions of your payment cards, loyalty cards, tickets and, sometimes, IDs. Think of it as taking pictures of all your cards and having them safely stored in one place on your phone, except these digital versions actually work for making payments. Common examples include Apple Pay, Google Pay and Samsung Pay.

On the other hand, your banking app is more like having access to your bank branch on your phone. It lets you check your account balance, transfer money, pay bills and manage your accounts – similar to what you'd do at a bank counter or ATM. While a banking app connects you to just one bank, a digital wallet can hold cards from many different banks and card providers all in one place, and lets you tap your phone to pay in stores without needing to open any app.

How secure are digital wallets compared to traditional credit cards?

Digital wallets are actually more secure than physical cards in several important ways. When you pay with a digital wallet, your actual card number isn't shared with the store. Instead, it uses a substitute number (called a token) that works only for that specific purchase. It's like sending a trusted friend to make a purchase for you instead of lending someone your credit card.

Digital wallets also require an extra step to use them – such as scanning your fingerprint, entering a PIN or using face recognition. This means that even if someone grabs your phone, they can't use your cards without your fingerprint or passcode. With a regular physical card, potentially anyone who has it can use it until you report it stolen. Many people are surprised to learn that digital wallets are often more secure than the plastic cards they've used for years.

What happens if I lose my phone with my digital wallet on it?

If you lose your phone with your digital wallet, don't panic! Your actual credit card information isn't fully stored on your phone, so a finder can't simply open your wallet and use your cards. They would need to get past your phone's lock screen AND know any additional passcodes for your wallet. It's similar to losing a safe with your valuables: Without the combination, it's very difficult to get inside.

The first step you should take is to use another device to track your phone through services like "Find My iPhone" or "Find My Device" for Android. You can lock or erase your phone remotely if needed. If you can't recover your phone, there's no need to cancel all your physical credit cards; you just need to remove your cards from the digital wallet service through their website. When you get a new phone, you can set up your digital wallet again with the same cards. This is much easier than having to wait for new physical cards to arrive in the mail.

Do all stores accept contactless payments, and how can I tell?

Not all stores accept contactless payments yet, though the number is growing rapidly. Look for special symbols at checkout that show contactless payment is accepted. These usually look like a sideways WiFi symbol (like radio waves - see the below example) or specific logos for Apple Pay, Google Pay or tap-to-pay. These symbols are typically displayed on or near the payment terminal where you'd normally swipe or insert your card.

If you're unsure, you can simply ask the cashier, "Do you accept tap-to-pay or mobile payments?" Most major retailers, grocery stores, pharmacies and restaurants now accept contactless payments, but smaller local shops or older establishments might not have updated their systems yet. Keep in mind that even if a store accepts contactless cards (where you tap your physical card – check out the January 2024 Tech Corner article on modern credit cards), they might not accept phone payments, though most modern terminals support both.

What information do merchants see when I use a digital wallet?

When you use a digital wallet, merchants see much less of your personal information than when you use a physical card. They don't see your actual card number, expiration date or security code. Instead, they only receive a temporary payment code that works just for that transaction. Think of it as giving someone a special ticket that's good for only one entry, rather than a key to your house that could be copied.

The store will still see basic transaction details like the amount of the purchase and sometimes partial account information that helps identify which card you used (like the last four digits). They also see your name as it appears on your card. This limited information helps protect your privacy and reduces the risk if a store's system is ever compromised. Your sensitive card details stay safely tucked away, unlike when you hand over a physical card that shows all your information.

Are there spending limits on contactless payments?

Yes, most contactless payments have spending limits for security reasons. In the United States, these limits typically range from $50 to $250 per transaction, depending on your bank and the store's policies. It's like having a daily withdrawal limit at an ATM: It's there to protect you if your card or phone falls into the wrong hands.

For larger purchases that exceed the contactless limit, you might need to insert your physical card and enter your PIN, or provide additional verification through your phone. These limits, however, have been increasing over time as the technology proves secure. If you're planning a big purchase, it's a good idea to bring a backup payment method just in case.

Are there any fees for using digital wallets I should know about?

Good news – there are typically no extra fees for consumers to use digital wallets. The service is free to set up and use for making purchases. The banks and wallet providers (like Apple, Google or Samsung) have agreements with merchants, so you don't pay any additional charges beyond what you'd pay using a physical card.

The same fees that apply to your physical cards still apply, however, when using them through a digital wallet. For example, if your credit card charges foreign transaction fees when used abroad, those same fees will apply when using that card through your digital wallet. The wallet itself doesn't add extra costs – it's just a different way to use your existing payment methods.

If you’re into credit card points as much as I am, you’ll be happy to know you can still accrue them while using your digital wallet!

Can I use digital wallets for online shopping or just in stores?

Digital wallets work for both in-store and online shopping. When shopping online, look for buttons that say "Buy with Apple Pay," "Google Pay," or similar options during checkout. Instead of typing in your card number, expiration date, and security code for every purchase, you can just click the digital wallet button and confirm with your fingerprint or face ID.

This works in shopping apps on your phone too. It's like having an express lane for checkout – faster, more convenient and more secure than manually entering your card details. Some digital wallets even let you send money to friends and family, similar to services like Venmo or PayPal, making them useful for splitting bills or sending birthday money.

How do I set up a digital wallet if I've never used one before?

Setting up a digital wallet is simpler than you might think. First, find the wallet app that comes with your phone – Apple Pay (iPhone), Google Pay (Android) or Samsung Pay (Samsung phones). Open the app and follow the step-by-step instructions. It's like setting up a new account on any other app, but with a focus on payment information.

When prompted, you'll need to add a payment card by either taking a photo of your physical card or entering the details manually. Your bank may send a verification code via text message or require you to call them to confirm it's really you. After verification (usually just a few minutes), your card is ready to use. Finally, set up your security method – typically a fingerprint, face scan or PIN – which you'll use to approve purchases at the point of sale.

You can also follow the above steps to add your Chase cards, which have excellent integration with digital wallets. Chase might send you a text message or have you verify through the Chase app to confirm it's really you. Once verified, your Chase card will appear in your digital wallet ready to use. The process usually takes just a few minutes.

If you’d like to see step-by-step instructions, Chase has a robust online customer service center, complete with videos.

Can I use my digital wallet when traveling internationally?

Yes, you can use your digital wallet in many countries around the world, especially in urban areas and tourist destinations. Countries like Australia, Canada and the UK and much of Europe widely accept contactless payments. It's like having a universal translator for payments – your phone communicates with payment terminals regardless of the local language.

Before traveling, check that your underlying cards work internationally. (Call your bank if unsure – don’t wait until you arrive in your destination country to call!) Some countries actually have more advanced contactless systems than the United States, making digital wallets even more widely accepted there. Remember that while the wallet technology works globally, any foreign transaction fees from your bank still apply. Your digital wallet also provides an extra layer of security when traveling, reducing the risk of card skimming or theft.

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Links to Prior CAA Tech Corner Columns

 

#1 Artificial Intelligence

#2 Generative AI

#3 Autonomous Cars

#4 Anatomy of a Modern Credit Card

#5 How to Whitelist an Email Address

#6 Multi-Factor Authentification

#7 The Science of a $100 Bill

#8 The CrowdStrike Disaster

#9 JPMC Meets Amazon in the Cloud