Cyber Security: Digital Wallets


You’ve probably heard the term “digital wallet.” Like the physical wallet and pocketbooks that have been around for centuries, digital wallets contain items that are valuable to you. How do they work? Are they safe? Can you do away with the leather billfold held together with a rubber band in your back pocket?

Like the real-world wallet, you can store different items in a digital wallet. In the physical version, you might have credit or debit cards, cash, store rewards cards and insurance ID cards. The only one of those items you can leave out of your digital wallet is cash, but the other categories are ideal candidates.

To use a digital wallet, the one thing you will need is either a smartphone, tablet or fairly modern computer. Both Windows and Mac computers, as well as pretty much all smartphones with a touch screen, can be setup to use as a digital wallet. On phones and tablets, it’s an app, while on computer it’s usually built into your web browser. Search in the app store or on your computer’s web browser for “digital wallet.” While many firms make a digital wallet, look for the one made by your smartphone’s or computer’s manufacturer.

Most people use digital wallets as a payment device. By storing your credit and debit cards’ information, you can then use your phone to make payments at retail locations. The problem here is that not all, indeed only a minority, of stores and restaurants accept these electronic payments. Also, some only accept one kind (for example, Google Pay) so if your device doesn’t support that variety, you’re out of luck. Setup usually involves entering your cards’ information (either manually or by scanning it in).

To pay with a digital wallet, you hold the phone close to the small terminal at the checkout, and supply verification—facial recognition, a fingerprint, or your phone’s passcode. The phone and the terminal then perform an encrypted transaction, with a code unique to that one instance. Charging to your account then takes place remotely.

This is much more secure than the old card-swipe method. It’s also more secure than the newer chip-on-a-card verification that arrived a decade ago. If your credit cards are stolen, or your account information hacked, the bad guys can instantly start running up a bill. With a digital wallet, though, they need that second form of verification—face, fingerprint, passcode. Just stealing your phone gains them nothing.

Storing your store rewards cards in your digital wallet means no more bulky keyring with forty-seven plastic fobs. Most all merchants can scan a barcode image on your phone to use your rewards card at the checkout.

Several states have announced plans to allow digital wallets to store driver’s licenses, though Virginia is not one of those at the moment.

On your laptop or desktop computer, a digital wallet can make shopping online easier and more secure. Digital wallet transactions don’t involve sending your card info in readable format over the Internet, and the wallet’s encryption should virtually eliminate hacking of financial data.

All smartphones, tablets and computers should be protected with a passcode, as well as a fingerprint or facial recognition. (If you don’t have any of these, your digital wallet won’t work).) Like your leather billfold or purse, losing your digital wallet is inconvenient. Unlike its physical counterpart, though, this loss shouldn’t cost you any fraudulent charges or worse, identity theft. Replace the stolen phone, restore from a backup and you will be up and running.

You made a backup, right? 


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