Revolutionizing the way businesses and consumers complete transactions, digital wallets continue to grow in popularity due to their ease of use and stronger security when compared to traditional payment methods. However, the increased use of digital wallets makes for a major target for cybercriminals. It is important to remember to follow best practices when opening and using digital wallets to ensure you and your information are protected.
What is a Digital Wallet?
A digital wallet is an online payment tool, usually in the form of a mobile app, that can store payment information (credit cards, debit cards, bank account information), gift cards, membership cards, plane and transit tickets, identification cards and other important information. Digital wallets are most frequently used as a payment method for in-store shopping transactions conducted between a user’s mobile device and a business’s point-of-sale system. With a digital wallet, users don’t have to carry cards or cash with them to make purchases, therefore eliminating the risk of lost or stolen cards.
The most popular digital wallets are:
- Apple Pay
- Google Pay
- Samsung Pay
Benefits of a Digital Wallet
Added Layer of Security
Due to advanced encryption and tokenization, digital wallets can be much safer and more secure than physical cards. When personal information such as card and account numbers is added to the digital wallet, the data is encrypted and only authorized users can access it.
The data is secured further through a process called tokenization which takes the encrypted data and replaces it with a token – a string of random numbers and letters. Every time a payment is made, a token is randomly generated and only the payment gateway can match the token to accept the payment. Through both encryption and tokenization, the original payment information becomes unreadable and useless to any unauthorized entities trying to access it.
Convenient, Fast Payment
Physical wallets can be bulky, difficult to manage and lack organization – making checkout and payment inefficient and slow. By eliminating the need to carry cash or cards, digital wallets free up pocket space. Through a user-friendly layout with all cards stored in one place, paying with a digital wallet only requires a few taps which saves time at checkout.
Practical, Easy Money Management
Keeping track of spending through multiple online accounts can be difficult and time-consuming. Digital wallets can make budgeting and monitoring spending much easier and help avoid the frustration of cross-checking multiple accounts. With a digital wallet, cards and accounts can be managed all from one place.
More Than Just Cards
Although digital wallets are most commonly used and known for in-store and online transactions, they can also store a multitude of other important documents and information. Many businesses make digital versions of loyalty cards that customers can store in their digital wallets to continue earning rewards and special offers. Digital wallets can also store:
- Gift cards
- Boarding passes
- Event tickets
- Insurance cards
- Driver’s licenses
- Hotel reservations
- Digital coupons
Best Practices of Using a Digital Wallet
Although digital wallets are a highly secure method of storing sensitive personal information, there are extra steps one can take to ensure the highest level of protection.
Stay Up-to-Date on Data Breaches
Major data breaches are all too frequent in our news, but companies aren’t the only target. Cybercriminals can target anyone and gaining access to sensitive financial information is a prime interest for them. A dark web scanner or monitor is a tool used to scan the dark web for your credentials to see if any of them were found in a breach. You can use a free personal dark web scan or a free business dark web scan tool to make sure your credentials are safe. Keeper offers the add-on BreachWatch, which monitors the dark web for breached accounts and alerts you so you can take immediate action to protect yourself against cybercriminals.
Use Multi-Factor Authentication
Although a strong and complex password is highly recommended to protect anything storing sensitive information, it is not the only action you can take in securing your digital wallet. Implementing two-factor or multi-factor authentication is a simple way to keep your data protected and prevent cyberattacks. Multi-factor authentication (MFA) is an authentication method where the user is granted access to a website, application or platform only after providing multiple verification factors that validate their identity. MFA offers several different authentication methods including Face ID, fingerprint scanners, SMS text message or an app like Google Authenticator.
Avoid Making Purchases on Public WiFi
The ability of a cybercriminal to place themselves between you and the connection point poses the biggest security vulnerability of public WiFi. Using public wifi puts you at risk of falling victim to man-in-the-middle attacks. During these attacks, you unknowingly communicate with the cybercriminal, who then collects and passes your information to the hotspot, rather than you connecting to the hotspot directly. If you make purchases while connected to an unsecured WiFi network, a cybercriminal could see your financial information and then try to use it to commit fraud. While there are ways to stay protected on public WiFi, such as with a VPN, it is still advisable to avoid using it.
Create Strong Passwords
Strong passwords should be long, complex and difficult to remember. Simple and frequently used passwords, such as password123 or your child’s name, are simple to remember but also simple for cybercriminals to decipher. Your first line of defense against cybercriminals hacking into your digital wallet and stealing personal data is to use strong, one-of-a-kind passwords.
Use a Password Manager
Keep Track of your Payment Information
Digital wallets make it easier than ever to keep track of transactions and financial information, however, it is still important and highly advised to keep a close eye on financial account history and bank statements to ensure there is no unauthorized activity. In addition, payment information should always remain up to date to provide the most accurate details.
Keeper enables users to securely store, generate and manage their passwords by creating high-strength, random passwords for each website, application and service, and storing them in an encrypted digital vault.
Protect your credentials and sensitive information, start your free trial today.