Digital wallets are safer than physical cards. Here’s why that’s important

Digital wallets are becoming increasingly popular with many Americans because they offer the kind of convenience and security that’s not available with a physical wallet. A 2024 survey by Consumer Reports found that 76% of Americans use one or more digital wallets, with 29% using them at least once per week and an additional 24% using them each month. 

The top three ways people used digital wallets were: 

• Paying for purchases with online merchants: 61%. 

• Sending payments to friends and family: 50%. 

• Making purchases in-person at a store: 38%. 

There are many reasons why people prefer digital wallets instead of physical cards. Carrying fewer physical cards, or no cards at all, means less risk if your wallet is lost or stolen. Digital wallet protection encompasses the security features of your mobile wallet and the protections provided by your phone. For many digital wallet users, this means they can often leave their credit and debit cards at home, which is both convenient and reduces their risk of fraud.  

Not only is fraud on the rise these days, credit cards were the number one type of identity theft in 2024, with nearly 450,000 cases reported to the Federal Trade Commission (FTC). With the right security protections on your digital wallet and your phone, and careful monitoring of your accounts, you can reduce your chance of getting scammed. Let’s take a look at how digital wallets protect your credit and debit cards and tips for using them safely. 

What is a digital wallet and how does it work?

A digital wallet is a smartphone app where you store payment information, such as your credit card and debit card, so you can make purchases with your phone. Some of the more popular digital wallet apps are PayPal, Google Pay, Samsung Pay, and Apple Pay. Whichever app you prefer, when you use it to make a contactless payment with your phone, the charge will appear on whichever credit card or debit card you linked to the app. To make an in-store purchase with your digital wallet, just open the app on your phone, choose whichever card you want to pay with, then tap your phone to the point-of-sale (POS) terminal. It’s just like tapping your credit or debit card to the terminal, with a few more steps involved. 

What makes digital wallets safer?

Are digital wallets safe? Mobile payment safety can be just as safe, or even safer, than carrying a physical wallet with your debit and credit cards. Here’s why: 

Tokenization 

Digital wallet safety starts with tokenization, which is a bit of computer code. Every time you buy something with your digital wallet, it creates a one-time token that the merchant uses to receive payment. This way, you don’t have to share your credit card and debit card numbers. Even if a cyber thief hacked into a merchant’s payment system, your card numbers won’t be compromised because the merchant doesn’t have them. 

Biometric authentication 

Digital wallets have security measures, such as biometric authentication, that require your fingerprint or facial recognition for every transaction. This way, even if someone stole your phone and hacked into it, they would still have a hard time accessing your digital wallet. It’s an extra layer of security for your accounts. 

Remote disabling 

Every smartphone has built-in security measures that you can (and should) use. This includes remote disabling. If your phone is lost or stolen, you might use your phone’s security features to block additional transactions, remove your payment information from your digital wallet, or even remotely delete all your data. 

No physical card needed 

Contactless payment security reduces your risk of theft because it’s a safer way to engage in transactions. Thieves can use skimming devices that steal credit and debit card information at stores, or even ATMs that are rarely used (ANB actively monitors our ATMs and ITMs). With a digital wallet, you can cut the risk of that happening.

What you can do to stay safe using digital wallets

Digital wallet security starts with good smartphone security. Leaving a smartphone unguarded is a bit like leaving your car unlocked. It just invites trouble. If requiring a password or PIN to unlock your smartphone seems inconvenient, think about how it would keep someone from quickly accessing your phone and personal information if your phone was lost or stolen. 

Of course, your passcode should be something strong that would be hard for someone to guess, and biometrics would make your phone even more secure. If you’re worried about a good Samaritan finding your phone and not being able to reach you, you could always include information on your lock screen, such as the cell number of a friend or family member. 

You can improve the security of your phone, and your digital wallet, by making sure you understand all your phone’s security features and can log on to your phone and digital wallet accounts online, just in case. Make sure you keep your phone’s software, security apps, and your digital wallet apps updated and only add cards to your digital wallet from trusted banks and payment providers. 

Whether you use a digital wallet or not, we recommend monitoring your banking and credit card accounts regularly to look for signs of unusual activity, identity theft and fraud. 

Fraud prevention if a retailer’s customer data is stolen

Just think about how often you see news reports about a company falling victim to a cyberattack, with its customers’ credit card information stolen. That often includes people’s payment information. As mentioned above, credit cards were the number one type of identity theft in 2024.  

With scams, fraud, and cyberattacks on the rise, it makes sense to protect your credit and debit cards—especially when digital payments are increasingly common and the use of cash is declining. A digital wallet isn’t just convenient, it reduces your risk exposure by protecting your account information and your money with tokenization (mentioned above). Adapting these more secure payment methods today means more peace of mind tomorrow. 

Embrace the safer way to pay

To start using a digital wallet today, use or download a trusted app like Apple Wallet (pre-installed on iPhones), Google Wallet, or Samsung Wallet from your phone’s app store, open it and follow the guided instructions. Enable biometrics like Face ID or fingerprint, set a backup PIN, and confirm any terms. Then you’re ready to shop with boosted, fraud-prevention confidence. 

Learn more about fraud prevention

Visit ANB’s personal fraud prevention page to learn more about how to spot a scam, how to keep your passwords safe and more.  

If you notice suspicious account activity, report it immediately. Call your local branch or Client Support at (800) 279-0007. ANB will never contact you and ask for your account information.