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With the increased use of digital wallets, contactless may become the default option over carrying physical credit cards.

Key points

  • Digital wallets allow you to keep virtual copies of your payment cards on your mobile devices.
  • Peer-to-peer payment apps allow you to send and receive money from linked payment accounts.
  • The ongoing pandemic has contributed to the need for contactless payment options.

We’ve come a long way since the 1990s, when cell phones first became a popular accessory. With every technological advance, our smartphones become less of a luxury and more of a central part of our lives.

More recently, digital wallets and P2P payment apps have gained popularity, in part due to the pandemic and the increased need for contactless payments. A 2021 Visa study showed that 74% of small business owners surveyed expected consumers to continue to prefer contactless payments after the widespread rollout of a COVID-19 vaccine. A recent Chase survey echoed similar sentiments, with 73% of respondents agreeing that contactless payments are more convenient than other payment methods.

But can your phone replace carrying those plastic (or metal) credit cards in your wallet or purse? Possibly.

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Smartphone payment technology

It seems like every week or month, there’s a new way to access or spend money using your smartphone. Here’s a look at some of the technologies that have become popular options for contactless transactions among consumers in recent years.

digital wallets

A digital wallet, or mobile wallet, allows you to add payment card information to your mobile devices to pay in stores and online without requiring your physical credit or debit card. Basically, it turns a smartphone into a wallet, so people no longer have to carry cards with them.

To use a digital wallet, simply add your information to the wallet of your choice on your mobile device, then open it when it’s time to pay. The process varies depending on the digital wallet you use. You may need to open and scan a QR code or hold your phone close to a contactless payment processing device during checkout. Digital wallets create contactless payment opportunities instead of having to swipe or insert a physical payment card.

Digital wallets include:

  • apple payment
  • google pay
  • samsung pay
  • Fitbit Pay
  • Garmin Pay

Peer-to-peer payment apps and other digital payment options

Peer-to-peer (P2P) payment applications have become a mainstay of our daily lives, making it easy to send and receive money between friends, family, and businesses. These apps allow you to transfer funds with other people almost instantly through linked bank accounts and credit cards. P2P payment applications include:

Restaurants like Starbucks and Chick-fil-A have also entered the digital payment space with the ability to add payment cards directly within their mobile apps. Instead of pulling out your credit card to enjoy your pumpkin spice latte, you can simply open the Starbucks app and scan your card or prepaid gift card.

Some credit card issuers now provide virtual card numbers so consumers can shop online without exposing their credit card numbers. As you make purchases, the card company generates an alternate card number to protect your information as an added level of protection.

“Buy now, pay later” services have also become an alternative to using a credit card for online purchases. These installment loans allow you to make purchases online, paying a portion during payment and dividing the balance into several equal payments.

Can you replace your physical credit cards with a smartphone?

While some people will probably still prefer to use “real” cards or cash to pay for purchases, it’s relatively easy to set up your smartphone, depending on the device, to handle most of the financial transactions in your life. It could apparently replace credit and debit cards through digital wallets, P2P payment apps, automatic transfers, and virtual card numbers.

Pros and cons of using your cell phone to pay

As much as we love technology, there are pros and cons to using your mobile phone for financial transactions.


  • Convenience: Using your cell phone is more convenient than pulling out your wallet and encourages contactless transactions.
  • Security: Digital payments use data encryption and other security measures to protect your information.
  • Multiple choices: There are several digital wallets available now, so there is likely to be one that will fit your needs.


  • Options could be limited: There are several digital wallets and other payment services available, but it may depend on the operating system and manufacturer of your mobile device.
  • Excessive expenses: Eliminating the physical act of pulling out your credit card in a store could lead some consumers to spend more impulsively.
  • Rate: Some digital wallets may charge a fee for using payment services.

Should you get rid of your credit cards?

Don’t throw away or shred those credit cards, even if you’ve switched to using your phone for all payments. You never know when you might need them, especially if your phone is lost, stolen or damaged, or you temporarily lose the ability to take out your wallet. Technology isn’t perfect, so having a physical card on hand might be a good idea.

You don’t necessarily have to carry them with you all the time. You can keep them somewhere in your house for storage. And be sure to protect yourself and the information stored on your phone to ensure your payment information doesn’t end up in the wrong hands.

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