They say that cash is king, but consumers don’t seem to use it anymore to pay for goods and services. More than 80% of American consumers used contactless payments in 2021.

Contactless payments aren’t just trending in the United States, either. The contactless payment market is going to quadruple globally over the next four years.

Leading the way are digital wallets and contactless cards. These are the primary forms of payment.

With a digital wallet, you just need your phone. That’s why you need to know how to use a digital wallet.

You might be able to ditch the heavy wallet and just keep your phone in your pocket.

If you’re trying to get a handle on this tech trend, you’ll want to keep reading. You’re about to learn what a digital wallet is, how to use one, and get other helpful financial tips.

What Is a Digital Wallet?

A digital wallet is a type of contactless payment method that allows you to use your phone at a payment terminal. You use a digital wallet app to link your payment methods.

When it’s time to pay for an item like a cup of coffee, you bring up the app and use that for payment.

This is a convenient way to pay. How many times have you left your wallet at home or brought the wrong credit card with you?

It can produce anxiety and leave you feeling embarrassed. You can avoid that feeling just by having a digital wallet.

Plus, you don’t need a thick and heavy wallet in your pocket anymore. It leaves you vulnerable to pickpockets who can swipe your wallet without you knowing it.

Sitting on a thick wallet in your back pocket isn’t good for you, either. It can throw your hips out of alignment and cause pain in your lower back. It can pinch the sciatic nerve, putting you in a very painful situation.

How to Use a Digital Wallet

Do you want the convenience of using a digital wallet? Let’s take a look at how they work and how to use a digital wallet.

You might be hesitant to use a digital wallet because you don’t want your card information stored on your phone. A digital wallet doesn’t store the actual card numbers.

It creates a virtual card number, complete with different expiration dates and CVC numbers.

The number gets encrypted and can only get accessed by authorized institutions. Digital wallets use tokens, which are unique codes that get generated between the wallet and the payment processor.

These numbers can’t get accessed or read by hackers or people who want to steal your payment information. When you do make a payment, you need to access your phone through a PIN or fingerprint.

Start by picking a digital wallet app. The top digital wallets are Google Pay, Apple Pay, Samsung Pay, Cash App, and Venmo. The mobile device you use will influence the digital wallet you choose.

For example, if you use Samsung devices, you’ll gravitate towards Samsung Pay. If you’re deep within Apple’s ecosystem, you’ll use Apple Pay.

You’ll want to check the features and compatibility with other apps. Some digital wallets can store boarding passes, travel tickets, rewards program cards, and concert tickets.

Think about the companies that you use the most for travel and entertainment. You want to make sure that those companies have compatibility with the digital wallet app.

Setting Up Your Digital Wallet

It’s easy to set up and use a digital wallet. Open up your digital wallet app. Depending on your bank, you can automatically link your card information in a few clicks, or you’ll have to manually enter your credit card information.

The good news is that this is the only time you need to enter this information. You can set up multiple cards and designate one as a default payment method.

Making Payments With Digital Wallets

Your cards are set up. How do you make payments using a digital wallet? If you’re at a retail location, look for a contactless sign. It’s similar to a WiFi sign, except that the contactless sign is sideways.

When it’s time to pay, hold your phone over the point-of-sale device. Some retailers may require a PIN, but for the most part, the payment happens instantly.  

Ecommerce retailers sometimes offer the ability to pay with a digital wallet. You can use that without having to enter your credit card information.

That option makes the online payment much more secure than entering your card information.

Banks offer the option to use digital wallets at ATMs to withdraw and deposit funds. Check with your banks to see if you have this option or not.

Do you want to send money to a friend to pay for dinner or coffee? Some digital wallets have a feature that let you make peer-to-peer payments.

All you need to do is enter a phone number or email address with the amount of money to send. They’ll get the money in just a few seconds.

Do Digital Wallets Work With Cryptocurrency?

Cryptocurrency investments increased over the last decade and it’s become mainstream over the last couple of years. Banks and tax agencies are just starting to catch on.

Banks and financial companies are starting to offer more services that incorporate cryptocurrencies. Tax agencies started to publish guidelines and regulations regarding the taxation of cryptocurrency.

Now that it’s going mainstream, you’re starting to see digital wallet offerings for cryptocurrency.

Apps like Venmo and ByteWallet allow you to buy and sell cryptocurrencies like Bitcoin and Ethereum. These apps allow you to make digital payments with cryptocurrency.

This seems like a great thing, but you have to use a digital wallet that knows how to store crypto. ByteWallet is a crypto wallet first and foremost.

Venmo and other apps are digital wallets first, then added crypto functionality later on.

ByteWallet lets you exchange cryptocurrencies, set up a bank account, and take money out at ATMs. Take a look at their map to locate ATMs across the country.

How to Store Crypto Securely in a Digital Wallet

Is cryptocurrency secure?

The biggest risk in cryptocurrency isn’t theft. It’s price volatility. All it takes is a tweet or a commercial by a celebrity to send crypto prices through the roof.

The novelty wears off just as quickly, sending prices tumbling down.

You still need to protect your crypto and make sure that it’s stored securely. You can use a Bitcoin wallet that stores your private and public Bitcoin keys.

Digital wallets do have added security measures to protect your funds. You’ll want to check with prospective providers to make sure that you have the best digital wallet.

Financial Management Tips for a Contactless World

The great thing about a digital wallet is that it’s convenient. The bad part is that you can easily lose track of how much money you spend.

Nearly three-quarters of people don’t follow a budget. A fun night out can turn into a nightmare at the end of the month if you spend beyond your means.

You’ll want to keep track of your finances through a personal finance app like Mint or You Need a Budget. You can see how much money you spend and categorize purchases.

You’ll be able to see how much you spend on things you don’t need and cut back accordingly.

Go into your bank account and see if you’re able to set a daily spending limit. That step can save you from making an impulse buy online or at the store.

Check your bank accounts once a week. You want to make sure you’re tracking your inflows and outflows.

It helps to set financial goals. You might want to pay down debt or save enough money to buy a home. These goals will help you prioritize purchases.

You’ll be able to use your digital wallet freely and responsibly.

Use a Digital Wallet to Your Advantage

A digital wallet is a way to store your payment information on your phone. You can make payments online, in person, or send money to a friend all through your phone.

It’s safe, secure, and convenient. It’s easy to learn how to use a digital wallet. Just download a digital wallet app, add your cards, and use the digital wallet for payments.

You don’t need to carry your wallet or worry about leaving your card somewhere. Even if you lose your phone, your payment information is safe.

Now that you know how to handle your finances in a digital world, take a look at the home page of this site for the latest financial news.