Skip to content

Is it time to ditch your wallet? The pros and cons of mobile payments

July 10, 2021
5 min read
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

We’ve all probably done it. In a rush to get out the door, you leave an essential item on the kitchen table. For me, it’s generally my wallet, which used to be the biggest problem when it came to buying lunch that day.

These days I purposefully leave my wallet at home and opt instead to carry only my phone, using the mobile wallet function. It has become my newest lifeline, containing everything from my credit card to my COVID-19 vaccine card. The thought of carrying anything other than my phone and government ID seems pointless now, as everything I need is usually at the touch of a button.

New to The Points Guy? Want to learn more about credit card points and miles? Sign up for our daily newsletter.

The rise of mobile wallets

Mobile wallets are a fairly new invention that have grown in capability over the years. Google was the first major company to create a mobile wallet, Google Pay, in 2011, and Apple followed the next year with Apple Pay. These early versions of mobile wallets only held awards or discount codes, so essentially, they were a glorified coupon book.

Now, almost every major credit card offers the ability for customers to connect their cards to a digital wallet to pay and earn rewards as if they were swiping a card. Some of the most popular are Apple Pay, Google Pay, Samsung Pay, and PayPal. Although they differ in layout, they all have the same basic function that allows you to pay with a phone tap.

Related: 3 ways to pay without touching anything

Contactless MTA subway payment (Photo by The Points Guy)

Pros of mobile wallets

The last year has changed the way most consumers and businesses interact with money. Throughout the pandemic, we’ve seen countless signs that say “no cash” or “contactless payments only” as a way to limit physical contact. More people have opted for touchless options, such as mobile wallets, where they’ll never have to touch the keypad at the checkout line.

It’s important to note that mobile payments allow you to earn points on any bonus categories you may have on a credit card. Bonus points are related to a merchant category code, which is how vendors identify the type of business they have.

Related: Best contactless credit cards: Tap to pay

Sign up for our daily newsletter

Another benefit is the ability to carry less cash. Unfortunately, unlike credit, cash isn’t insured. If you carry large sums of money around, you always run the risk of losing it.

In some cases, digital wallets are even more secure than a credit card. Digital wallets use a process called tokenization. When you pay a retailer using a digital wallet, it creates a one-time-use card number, aka a token, instead of sharing your actual card number.

Mobile wallets don’t just hold forms of payment. They can also hold other important information, such as airline and train boarding passes, public transportation cards, event tickets, vaccine cards and award passes. It’s much more convenient to tap your phone at the turnstile or scan a QR code at the airport than carry physical pieces of paper that have to be read through.

(Photo by vinnstock / Getty Images)

Why do we still need physical money?

While credit is often a popular choice at many retailers, there are still some industries where cash is the only currency accepted. Think about the last time you paid a housekeeper, hairstylist or visited a small local deli -- did they prefer a cash payment?

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.

Related: The top 9 checking accounts for avoiding foreign ATM fees

Even in industries that do take credit, not all places accept mobile wallets. Businesses require payment readers that take near field communication (NFC) payments, and not all of them have updated readers. This can cause a problem if a mobile wallet is all you have on hand.

If you’re like me and adore the simplicity of mobile payments, you’ve probably also run into the problems they can have. Phones often die, and if you’re without a charger, that handy mobile wallet will no longer exist. That can put a hold on shopping plans or become disastrous if you have important documents such as train passes, concert tickets or your vaccine card.

Bottom Line

Mobile wallets have only increased in popularity since the pandemic started in March 2020. They provide a faster way for customers to pay and still allow you to earn points on bonus categories. For folks always on the go, having all your forms of payments and passes in one place puts the mind at ease.

No matter how much we love technology, it’s important to remember that moving to a cashless society isn’t beneficial for all people. There are still small business owners, people with low income or poor credit and older generations who don't want to rely solely on credit. Cash may always exist, but you have the choice to make life a little simpler with mobile wallets.

Related: Here’s how the pandemic is completely changing how we pay

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.