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Are mobile wallets safe?

July 31, 2022
7 min read
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If the coronavirus has highlighted any trends, a big one is that people don't want to touch things they don't need to.

Most of the credit cards in your wallet probably offer contactless payment capabilities these days. With just a simple tap on the card reader, it’s a win-win for you: your data is more secure, and you’ll encounter fewer touchpoints. I've also found that these payments are faster, meaning more convenience on my end.

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Another increasingly-common trend is mobile wallets. You can load all of your credit and debit cards — as well as boarding passes, tickets, loyalty membership cards and more — all in one place. Whether you have an Apple or Android device, you can access your mobile wallet via your smartphone or smartwatch.

With the rise of mobile wallets, you may wonder if it’s a good idea to load all your cards on one app. In this guide, we go over everything you need to know about mobile wallets and whether they’re safe.

How mobile wallets work

There are many mobile wallets to choose from. Perhaps the best (and easiest) option is to use whichever mobile wallet comes preloaded on your smartphone — whether that be Apple Pay, Samsung Pay, Google Pay, etc.

No matter your preference, setting up your mobile wallet should follow a similar process. You’ll add the cardholder's name and the credit card number, along with the expiration date and CVV number. Your bank may ask you to verify your card information with a two-step authentication process. After that’s complete, you’re ready to begin using cards in your mobile wallet.

I've loaded multiple credit cards and my Priority Pass card into my mobile wallet. (Screenshot from Apple Wallet)

Once you’ve loaded all of your cards, you’ll be able to see them all lined up in your mobile wallet. Beyond the type of card and the last four digits of the card number, the full credit card number or any sensitive information isn't visible on your device. This keeps your information secure in case someone gets access to your phone.

Related: Best contactless credit cards: Tap to pay

You’ll select one card as your main card, which will be the default method of payment whenever you use your mobile wallet to pay.

Anytime you see a contactless payment symbol, you can pay with your contactless card or your mobile wallet. You’ll then hold your credit card, phone or smartwatch near the payment reader. If you're paying with your phone or smartwatch, your payment won’t go through until you verify the purchase with facial identification, your fingerprint or your passcode, which adds an extra layer of security.

Related: 3 ways to pay without touching anything

Are mobile wallets safe?

While it may seem dangerous to load all your card information onto your phone or another device, you should know that mobile wallets are safe from credit card fraud. Your data is encrypted and cannot be seen by the merchant (or anyone) once you upload your card details to your mobile wallet.

This is because mobile wallets benefit from tokenization, meaning that your full credit card number is replaced by a randomly generated number, or token. Consider this compared to traditional payment methods or using your card to dip or swipe at a payment reader. If you pay for a meal at a restaurant by swiping your card, a hacker may be able to retrieve your card information from the merchant’s payment reader. When paying with a mobile wallet instead, your true card numbers are safe thanks to tokenization.

But what if your phone is lost or stolen? Couldn't someone just use the credit cards loaded into your mobile wallet? It's not likely. This is because you need to enter a passcode or other method of authentication before using your mobile wallet to pay for a purchase. As long as you create a secure passcode or can remotely wipe sensitive information from your device if it’s lost or stolen, it’s virtually impossible to get access to your cards.

In fact, Apple recently released three separate videos in the U.K. touting Apple Pay as more secure than credit cards, highlighting these very features. If you're interested, those videos are here, here and here.

Remember that you can also deactivate your card immediately, should you lose either your physical card or your phone with the card loaded into a mobile wallet. In this case, notifying the issuing bank will result in a new card being sent to you in the mail. In the meantime, you won’t be liable for any unauthorized charges on your credit card.

Related: Credit card fraud: How to spot and report it

The Federal Communications Commission also has a list of best practices for mobile wallet users that includes tips like being mindful of your surroundings when making payments, using unique passwords for each app on your phone and making payments while connected to public Wi-Fi networks.

Pros and cons of mobile wallets

Admittedly, I have lots of credit cards to keep up with — 26 at present. I’m a huge fan of Apple Pay, my mobile wallet of choice. This way, I only have to keep a few cards on me at once (whether I’m prioritizing a particular card to earn a sign-up bonus or striving to use the best credit card for each spending category, such as everyday spending, groceries or dining).

If you're often thinking about which cards to use for which purchases, it’s nice to see all your cards displayed on one screen. I find this easier to sort through than carrying around a physical wallet with 26 credit cards in it. Admittedly, I don't have all of my cards loaded into my mobile wallet at the same time. (There's usually a limit.)

(Photo by DjelicS / Getty Images)

Of course, there are a few cons to using mobile wallets. While mobile wallets and contactless payments have been on the rise (especially in the past few years), some merchants may not offer this payment option at all. Therefore, you shouldn’t totally rely on a mobile wallet; rather, it should serve as a backup payment method to the main cards you keep on hand. Additionally, the tap-to-pay feature may stop working at some of these terminals without explanation, and not having a physical card with me forced me to abandon a purchase at my local CVS recently.

In terms of security, the risks in using a digital wallet are much lower than the risks associated with losing your physical wallet or exposing your credit card number when swiping the card. Because I have to authenticate my payment (which can be done with face identification, passcode or fingerprint), it’s unlikely that my cards will be used if someone steals my phone. The only downside is that you'll need to set up a passcode for your Apple Watch to use Apple Pay on your watch in addition to your phone — though this is a momentary inconvenience for the sake of increased security.

Bottom line

To answer the question: yes, mobile wallets are safe. When you load your card information onto your app, your data is encrypted and tokenized, making it more secure than traditional payment methods.

While you shouldn’t solely rely on a mobile wallet, as not all merchants may accept contactless payments, they're becoming increasingly common. That's great for convenience and security, which don't often go together.

Additional reporting by Stella Shon.

Featured image by Getty Images/Westend61
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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3XEarn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
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    For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening

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  • $100 annual hotel savings benefit (on single hotel stay bookings of $500 or more, excluding taxes and fees, booked through thankyou.com)
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  • Lacks travel protections that other travel rewards cards come with
  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
  • Earn 1 Point per $1 spent on all other purchases
  • Annual Hotel Savings Benefit
  • 80,000 Points are redeemable for $800 in gift cards when redeemed at thankyou.com
  • No expiration and no limit to the amount of points you can earn with this card
  • No Foreign Transaction Fees on purchases