Digital wallet vs. physical card: why it's safer & easier

Asking what are the advantages of using a digital wallet over a physical credit card? puts you at the center of a major shift in payments, weighing data security against daily convenience.

Digital payment use is surging, as a Federal Reserve survey on mobile payments reveals 74% of U.S. consumers used them in 2022. This guide explains why that number is growing and what it means for your wallet.

Are digital wallets safer than physical cards?

Yes, digital wallets are designed to be safer than physical cards. They protect your financial data using advanced technologies like tokenization and biometric authentication, adding layers of security that a simple plastic card cannot match.

Enhanced security through tokenization

When you use a wallet, your card number is replaced with a unique code, or token, for each transaction. This process, a security measure that Visa’s tokenization framework explains, means your account information is never shared with the merchant.

If a merchant's database is breached, the stolen token is useless for making fraudulent purchases. A physical card, however, exposes your real number, which can be used repeatedly by criminals if compromised.

Biometric authentication for added protection

Digital wallets require you to authorize every transaction with your fingerprint or facial scan. This personal verification is a key reason why biometric authentication is a security tool, ensuring only you can approve a payment.

This adds a crucial layer of protection that physical cards lack. Even if your phone is lost or stolen, your money remains secure, as no one can access your wallet without your biometric data.

What happens if you lose your phone?

If your phone is lost or stolen, you can remotely disable your digital wallet in seconds. This immediately prevents anyone from making unauthorized payments using your device.

You can instantly lock your wallet using features like Apple's Find My. This step suspends all payment capabilities, as Apple explains on its device recovery page.

The best part? Your physical cards remain active. You avoid the hassle of canceling and replacing them, and can simply re-link them to a new phone when you are ready.

Key benefits of using a digital wallet

Beyond superior security, digital wallets streamline your daily life. They offer greater convenience, help you declutter your physical wallet, and provide tools for better financial control, making your everyday transactions and budgeting easier to manage.

Unmatched convenience for in-store and online payments

In stores, you just hold your phone near the reader and authenticate to pay. This simple tap-and-go process makes transactions significantly faster than traditional card payments, eliminating the need to search for your wallet.

Online, digital wallets autofill your payment and shipping details, saving you from manually typing card numbers and addresses. Checkout becomes a single click, turning a tedious process into a seamless, secure action and reducing checkout time.

A clutter-free way to organize your cards and passes

Digital wallets do more than simplify payments; they replace your overstuffed physical one. You can securely store digital versions of nearly everything, as Google Wallet’s storage features show. These platforms hold far more than just payment cards.

This helps you declutter and organize by storing items such as:

• Loyalty programs and gift cards
• Boarding passes and public transit cards
• Event tickets and proof of vaccination
• Digital car keys and even state IDs in select areas

Streamlined expense tracking and budgeting

Digital wallets automatically record every transaction, providing a detailed spending history in real time. This gives you an automated overview of your spending habits, eliminating the need to save paper receipts or wait for bank statements to post.

Many wallet apps also offer built-in tools to categorize your purchases and set spending alerts. These features help you proactively monitor your finances, ensuring you stay on track with your budget goals without extra work.

What is a digital wallet?

A digital wallet is a secure application on your smartphone or smartwatch that stores your payment information. Below, we'll cover how this technology works and look at the most common examples you can use today.

How does a digital wallet work?

Using a digital wallet involves a few simple and secure steps from setup to payment.

• First, you add your credit or debit card to the wallet app on your phone. Your bank then securely verifies the card.
• To pay in a store, you simply hold your phone near the contactless payment terminal.
• Your phone will then prompt you to authorize the purchase with your face, fingerprint, or PIN.
• Once approved, the app sends a unique token—not your card number—to complete the transaction securely.

Popular digital wallet examples

The most common digital wallets are likely already on your phone, integrated directly into your device’s operating system. The leading options include:

• Apple Pay is the native wallet for all Apple devices, including the iPhone, Apple Watch, and Mac.
• Google Wallet comes standard on Android smartphones and is available for download on the Google Play Store.
• Samsung Pay is offered exclusively on Samsung Galaxy devices and works at most payment terminals.

Will digital wallets replace physical cards?

While digital wallets are becoming the primary payment choice for many, it is not yet time to discard your physical card. There are still key situations where you will find a plastic card is essential for payment.

When you might still need a physical card

It's wise to carry a physical card as a backup. You'll still need it in several situations, as contactless payment adoption isn't universal among U.S. merchants.

You may need a physical card:

• When your phone’s battery is dead, leaving you unable to access your wallet.
• At businesses that have not yet upgraded to modern, contactless payment terminals.
• For car rental or hotel deposits, as some companies still require a physical card for holds.

Take the next step in secure digital payments

Digital wallets offer superior security with tokenization and biometrics. They streamline payments and declutter your life, making them a clear upgrade over traditional cards for everyday transactions.

The JIM Card is a virtual Visa designed for this digital-first world. It links directly to your JIM balance and can be added to your Apple Wallet for immediate use.

Ready to simplify your finances? Open a JIM account to get your virtual card, ready for secure spending anywhere Visa and Apple Pay are accepted.