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

July 10, 2021
5 min read
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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.

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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

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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.

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How we chose these cards

Our points-obsessed staff uses a plethora of credit cards on a daily basis. If anyone on our team wouldn’t recommend it to a friend or a family member, we wouldn’t recommend it on The Points Guy either. Our opinions are our own, and have not been reviewed, approved, or endorsed by our advertising partners.
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TPG featured card

Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards

2 - 10X points
10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day

Intro offer

75,000 bonus miles
Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

Annual Fee

$395

Recommended Credit

740-850
Excellent
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.

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023
Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day
  • Intro Offer
    Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

    75,000 bonus miles
  • Annual Fee

    $395
  • Recommended 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.

    740-850
    Excellent

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023