Digital Wallets – Is it safe?

Over the last year, people are starting to pay for stuff by waving, sliding, or tapping their smart phones. More and more apps are offering different ways to pay—they’re referred to as digital wallets.  A digital wallet is an electronic device that allows an individual to make electronic commerce transactions.

An individual’s bank account can also be linked to the digital wallet. The credentials can be passed to a merchant wirelessly via near field communication (NFC). The digital wallet consists of software and information. Once the user downloads a digital wallet app, their personal information must be added. In most cases, the wallet is tied to an existing credit card or bank account.

Digital wallet is offered by companies like Google, Samsung and many others. The system has already gained popularity in Japan, where digital wallets are known as Osaifu-Keitai or “wallet mobiles”.

This new technology does not necessarily guarantee that it will be able to prevent fraud. Identity theft is a real possibility with a digital wallet. Like any personal information stored on your phone, you should play it smart and install security software to protect this sensitive data. At this point, no one knows if any protection will be embedded in the software to prevent hackers from picking up your information over an open network or to keep anyone from stealing it after they steal your phone. Depending on how the store's system retains the information, could also present security concern.

But whatever be the ups and downs this technology will Change how we pay. One day these smartphone “digital wallets” will eventually replace physical wallets.