Will my rewards change if I pay by mobile wallet?
Editor's Note
Quick summary
Here at TPG, we regularly emphasize maximizing your earnings on each purchase. For example, we recommend using these credit cards at supermarkets and paying with these cards when at the gas pump.
But what if you use a mobile wallet — such as Apple Pay or Google Wallet — to pay for purchases? Will your "great for supermarkets" credit card still earn bonus points or cash back, or will that purchase code as something else, forfeiting rewards?
Let's examine whether your rewards will change if you pay by mobile wallet.
Related: 3 new technologies from Visa could lighten your wallet and payments
What is a mobile wallet?
Before we jump in, let's clarify what a mobile wallet is.
A mobile wallet is a smartphone app that holds things like credit cards, gift cards and mobile boarding passes for a flight. You don't need to show your physical credit card when paying with a mobile wallet. Instead, you hold your device near the payment terminal and make payments that way.
Mobile wallets can be useful for those who carry multiple credit cards, as they allow you to use them without the bulk of carrying them in your physical wallet.
Most credit and debit cards can be used with mobile wallets. However, there are exceptions.
Some prepaid cards, as well as some business credit cards, may not be available to add to mobile wallets.
Know, too, that you might receive an error when adding a new card since your mobile wallet may need time to complete a security review on your newly activated card.
Related: Are mobile wallets safe?
What rewards will you earn from mobile payments?
The good news is that mobile wallet payments at a supermarket should still be coded as a supermarket expense on your credit card statement, earning whatever rewards your card provides for supermarkets. That's because the Merchant Category Code — which stores set to identify their business type — stays the same. The MCC on your payment shouldn't change whether you swipe your credit card or pay with that same card through your phone's mobile wallet.
However, note that I said "shouldn't." You may sometimes see strange coding on these kinds of purchases. For example, two TPG employees had recent mobile wallet purchases at Walgreens, Rite Aid and CVS code as "merchandise."
I also ran into a unique situation while living in Brazil for nearly six years. Most businesses in Brazil that accept American Express cards use a separate credit card machine for these payments. Because of this, they classify the second payment terminal differently than the first.
For example, a restaurant will have a credit card machine for Visa, Mastercard or Discover payments; as the primary credit card machine, it's assigned a "restaurant" MCC. The Amex terminal is assigned a "bar" MCC to separate the payment-processing machines. That means these payments don't earn bonus points in a restaurant category.
Former TPG points and miles reporter Kyle Olsen had the same experience when visiting Brazil. When paying with Amex cards, he didn't earn bonus points at restaurants.
Barring these abnormalities, most mobile wallet payments earn how you would expect: Supermarkets are supermarkets, gas is gas, and taxis are taxis. A credit card with bonus-earning rates in those categories should provide the associated benefits.
Related: Is it time to ditch your wallet? The pros and cons of mobile payments
Credit cards with bonus earnings for mobile payments
Some credit cards award bonus points when making mobile wallet payments, regardless of your purchase. You could make a mobile wallet payment at your corner store or local mechanic and earn bonus points in this category, regardless of your card's other earning categories.
There aren't many cards that earn extra rewards on mobile wallet payments. However, they can provide serious value when you compare the mobile wallet earning rates to everyday earning rates for swiping your card the old-fashioned way. Here are some top ones:
| Card name | Mobile wallet earning rate | Earning rate on everyday spending |
|---|---|---|
| Kroger Rewards World Elite Mastercard®* | Earn 5% cash back with mobile wallet purchases (excluding Kroger Pay) on the first $3,000 in purchases each calendar year, then 1%, regardless of where the transaction was made
Earn 5% cash back on Kroger Pay transactions (excluding fuel center purchases, which do not earn rewards) on the first $3,000 in purchases each calendar year, then 2% | Earn 2% cash back at Kroger and its family of brands; 1% cash back outside of Kroger stores |
| U.S. Bank Altitude Reserve Visa Infinite® Card* | Earn 3 points per dollar on mobile wallet payments | Earn 1 point per dollar outside of bonus categories |
| Apple Card* | Earn 3% cash back on select merchants, such as Nike and Walgreens, when you use Apple Card with Apple Pay; 2% cash back on Apple Pay purchases otherwise | 1% back on purchases where Apple Pay isn't accepted |
*The information for these cards has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
For everyday spending (in which you won't earn any bonus points or cash back), changing your payment method could lead to hundreds or thousands of dollars in extra value at the end of the year.
Related: Your complete guide to Apple Pay
Bottom line
In most situations, paying by mobile wallet should net the same rewards as swiping your physical credit card. However, there are some exceptions.
There are a few cards that provide bonuses on mobile wallet payments. Additionally, there are times when you might earn according to your card's everyday spending category. As a result, it's important to double-check your cards' fine print to ensure you maximize your earnings — whether you pay the traditional way or via a mobile wallet.
Related: Maximizing credit cards to become points-rich without spending a ton