For a long time, leaving your wallet at home was usually just an accident. Most people need their wallets for their most important things, including bank and credit cards. Today, you can pay for most things with a digital wallet.
A digital wallet — or an electronic collection of physical bank and credit cards — can live on your phone or smartwatch. Rather than pull out your wallet and swipe a credit card, you can use your phone or watch to pay for goods or services.
Other ways to pay include buy now, pay later (BNPL) services, traditional cards, and even cash. But for many younger shoppers, a physical wallet isn't necessary.
What’s a Wallet For?
A wallet’s primary purpose is to hold money and your identification. This includes cash, bank cards, credit cards, and a state ID, like a driver’s license.
If you can move all of your money to your digital wallet and keep your identification on your phone, then you may not need to keep a physical wallet around. A handful of states, including Maryland, Georgia, and Arizona, have digital IDs for Apple and Google Wallets . Many states have digital IDs of their own, allowing you to confirm your identity when making purchases at stores and through TSA.
Sometimes it’s easy to forget our wallets at home. But our phones are almost always unforgettable. If you’re meeting up with a friend, getting a Lyft, or just checking your bank account, you’re doing it on your phone — you don’t need your wallet for any of those things. So, the less you have to carry around, the better.
Digital Wallets are Now Just Wallets
While older folks may still use cash and physical credit cards, that’s not how younger spenders shop. A recent study from PYMNTS found that digital wallet users spend an average of 31% more than non-users. Almost 80% of Gen Zers are digital wallet users .
If digital wallets aren’t allowed or accepted, merchants could lose business. A survey from accounting firm EY found that Gen Zers were twice as likely to delay a purchase if their preferred payment wasn’t available rather than choose an alternative payment method .
That’s a significant shift in how folks pay for goods and services. The same EY survey found that Gen Zers prefer debit card use and using alternative payment methods, like buy now, pay later (BNPL) apps over credit cards.
Even though merchants might accept credit and debit cards, using alternative payment forms like digital payments and wallets is one of the most important ways to attract and retain younger customers. Studies and surveys show that shoppers would rather go somewhere else than use a different payment method. And they’re more likely to spend more when they can pay with their digital wallets.
How to Use a Digital Wallet
Apple and Android phones have Wallets, which allow you to add your bank and credit card information. When shopping online, you can use your wallet at checkout, which prepopulates your preferred card information.
It makes shopping in person much faster. You can tap to pay using your phone or smartwatch when checking out. If you’re shopping in an app, your digital wallet already includes your card information, so you can seamlessly check out in a few seconds.
For debit users, many ATMs let you use your digital wallet instead of physical cards for banking access. If you ever need to take cash out or make an in-person transaction, your digital wallet can still work for you.
Are Digital Wallets Secure?
Older generations are more worried about online security than younger generations. In fact, younger generations are more willing to leave their physical wallets behind because they believe their digital wallets are more secure.
Think about it: if you’re out and someone steals your physical wallet, they have access to your ID and bank cards, potentially stealing your money and identity. If they get hold of your phone, you can immediately lock it, report it stolen, and remotely erase your information.
Banking and payment information are among the most vital things you should keep safe. According to the earlier EY survey, 40% of Gen Z respondents said data and privacy were extremely important, compared to 65% of non-Gen Z respondents. In the PYMNTS study, 23% of baby boomers and 24% of Gen Xers said they don’t use digital wallets because of data privacy and security.
While contactless and digital payments concern older shoppers, we can see that younger spenders don’t care as much about data security. You can still keep your data secure while going all digital by:
- Getting a password manager. Using a password manager helps you avoid duplicating predictable, easy passwords. Password managers typically come with other categories, like secure logins, documents, identifications, credit cards, and more, although it could come at a cost.
- Password generator. If you don’t want to use a password manager, try using a free password generator. These are in abundance, and you can search for them quickly. Be sure to keep track of the ones you’re using so you know how to log into apps and sites. You might need to keep a secure note on your phone or write them down somewhere memorable.
- Use additional safety. Many phones have extra safety features like Face ID, two-factor authorization, and passwords to open your phone. Make sure you enable as many features as possible in case your phone gets lost or stolen.
The Bottom Line
Even though older generations aren’t sold on digital wallets, Gen Zers clearly prefer them the most. They’re easier to use, convenient, fast, and much lighter than carrying around a wallet full of multiple cards and cash.
It might be time to ditch the (physical) wallet and go digital for good. If you can’t quite yet, consider bringing your ID and a backup card with your phone.