Is it time to ditch your wallet? The pros and cons of mobile payments
Everyone has forgotten their wallet at some point. The good news is if this happens to you, you can still access all of your credit cards by using your phone to pay for things and carry on as normal.
The rise of mobile wallets
Mobile wallets have been around for over a decade and have grown in popularity over time. Google was the first major company to create a mobile wallet — Google Pay — in 2011 and Apple followed suit the next year with Apple Pay.
Now, nearly every major credit card can be added to a digital wallet and used for mobile payments with the simple tap of your phone or smartwatch. Some of the most popular are Apple Pay, Google Pay, Samsung Pay, and PayPal.
Major retailers, like Walmart and Kroger, are also getting in on the action and rolling out their own versions of mobile wallets. Although they differ in layout, most mobile wallets have the same basic function: they allow you to pay with a simple tap — even if you don't have your credit card physically on hand.
Related: Tap-to-pay is coming to JFK's AirTrain
Pros of mobile wallets
Carry less
Mobile wallets lighten your load a little since you can access all of your credit cards without the need to carry each one with you. This also reduces the hassle of replacement in the event of loss or theft. Once your cards are linked to your mobile wallet, you even have the ability to pay for purchases with a smartwatch that's synced to your smartphone.
Mobile wallets are also great for housing other important information, such as airline and train boarding passes, public transportation cards, event tickets and membership and reward cards.
Enhanced security
Making mobile payments is more secure than using your physical card due to a process called tokenization. When you pay a retailer using a mobile wallet, it creates a one-time-use card number, aka a token, instead of sharing your actual card number.
Mobile wallets can't be hacked through credit card skimmers because during each transaction your actual credit card number is not transmitted. Mobile wallets, also require biometric authentication such as face or fingerprint recognition in order to complete a purchase. If you lose your phone, you can disable your cards much easier than with physical cards.
Easily track transactions
When you make a purchase with a mobile wallet, you receive a notification in real-time. This makes tracking your spending much simpler. Mobile wallets also have very intuitive and user-friendly app interfaces where you can get a detailed breakdown of your spending.
Bonus card earnings
Additionally, many credit cards still offer bonus earnings — with some even offering higher earning rates — when you use them through a mobile wallet.
The Apple Card earns 2% cash-back on all purchases when you use Apple Pay compared to just 1% cash-back when you use the physical card. The U.S. Bank Altitude™ Reserve Visa Infinite® Card offers 3 points per dollar spent on purchases made through a mobile wallet, compared to just 1 point per dollar when using the physical card. Many other cards have similar extra earnings when you pay through a mobile wallet.
The information for the Apple Card and the Altitude™ Reserve Visa Infinite® Card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Related: Best contactless credit cards: Tap to pay
Cons of mobile wallets
Dead battery
If your phone is dead or not working, you will not be able to utilize the full functionality of your mobile wallet. However, you can still access your transit cards — like your Metro card if you're in New York or your Orca card if you're around the Seattle area — as well as your house and car keys.
Lack of acceptance
Although most places accept credit cards, some places don't accept mobile payments. In these instances, you'll need your physical card. Additionally, some places are cash only, rendering mobile payments useless.
Payment and refund difficulties
Some TPG employees have reported issues with trying to get a refund on a particular item after paying with a mobile wallet or experienced limitations on their refund. One friend of TPG, for example, was only able to refund a Target purchase as a store credit after paying for it with Apple Pay.
Some shopping and food apps also have difficulty with mobile wallet purchases or won't allow you to combine mobile wallet payment with another form of payment, such as a gift card — all things to keep in mind when using these services.
Security concerns
Mobile wallets are not prey to the typical hacks that occur with physical credit cards and are more secure. They are, however, still vulnerable to hacks and cyber attacks.
The biggest security threat is if your phone is lost or stolen and you don't have a passcode in place as an added layer of privacy protection. This makes it more difficult for someone to access your cards and payment information in the event that they do get a hold of your device.
Why do we still need physical money?
While paying with cards is often a popular choice at many retailers, there are still locations where cash is the only currency accepted. It also doesn't hurt to keep some cash on hand for emergencies, tipping service workers and using vending machines.
Oftentimes, especially when traveling, the need for cash will arise, so it makes sense to be prepared by having a debit card that won’t charge exorbitant ATM withdrawal fees. If you are traveling abroad, many places accept cards, but an overwhelming majority of places in the world still only accept cash — remember to plan ahead and exchange your currency as needed.
Related: The top 9 checking accounts for avoiding foreign ATM fees
Bottom line
Mobile wallets can be beneficial for those who don't like carrying a physical wallet and don't want to deal with the hassle of digging around for a specific credit card when paying for purchases.
Mobile wallets are also multipurpose since they can hold items such as metro passes, membership cards and plane boarding passes. This makes it easy to keep track of paperwork — something that's extra handy if you're traveling with a larger group or kids.
TPG featured card
Rewards
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro offer
Annual Fee
Recommended Credit
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.
Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro Offer
You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.