Close up of a bakery employee holding a paying device while a customer makes a contactless payment transaction with their smartphone.

Why Should You Use a Digital Wallet?

4 min read

Last Updated: February 19, 2025

Table of contents

Key Takeaways

A digital wallet is a convenient way to complete a transaction using your smartphone at checkout.
A digital wallet can help you store credit cards, gift cards, customer loyalty cards, membership cards, and more.
Digital wallet payments might be a safer option because you reduce the risk of losing a physical credit or debit card.

If you have a smartphone, you have access to a digital wallet through your built-in apps (like Apple Wallet) or downloadable from your app store (like Google Wallet). A digital wallet stores your card information for easy access online or tap-to-pay card terminals. In fact, you can use digital or contactless payments in-store or online to auto-fill form information beyond your payment method.

Digital wallets come in three types—closed, semi-closed, and open. A closed wallet only interacts between you and a specific store, like a restaurant that gives rewards for using their app for ordering. With a semi-closed wallet like Zelle, the issuer or app has a contract at specific stores for payment acceptance. The most flexible digital wallet type is an open wallet like Apple Pay, Samsung Pay, Garmin Pay, and in-store with Google Pay. These open wallets work across most digital payment platforms.

Here are some popular reasons to start using a digital wallet to store your credit card in your phone.

How digital wallets work

Most digital wallet apps work with the help of a technology known as near-field communication, or NFC. An NFC system integrates with cashier/check-out stations via mobile apps and e-commerce websites to process your payment information. The NFC-enabled devices communicate wirelessly with each other over a very short distance, typically about 4 cm or less, allowing you to complete a contactless payment transaction.

Many digital wallets connect with your credit or debit card, and you may be able to see your card balance and available rewards points without logging into the credit card app. This can aid in financial decision making when considering a purchase. You might even be able to pay for your purchases with your credit card rewards directly through the digital wallet.

You might be able to add a credit card to another payment system. For example, you can connect your Discover^® Card with Apple Pay and still earn rewards for your purchases.

Efficiency and speed

No more digging in your purse or wallet for a physical card. No typing in your PIN. In mere seconds, you can complete a contactless payment transaction using your digital wallet with a tap or wave of your smartphone at the checkout terminal. Plus, as more consumers adopt this technology, checkout lines could become shorter as payments get speedier.

Simplicity on the go

If you’re like most people, you always have your phone with you. Imagine—you could leave your wallet and physical cards at home if you carry your loyalty card, credit card, and debit card in the mobile wallet on your phone. If a merchant accepts digital wallet payments, you’ve got everything you need right in your phone.

Organization of a mobile wallet

A digital wallet can help you organize your cards. You might sort by how you use your digital cards. Think about these categories:

Purchases (include credit cards and gift cards)
Loyalty cards (shopping and restaurants)
Membership cards (gym memberships or club passes)
Concert and event tickets
Travel (include airline boarding passes and transit cards).
Identification cards (health insurance, car insurance, and a few states allow you to store your driver’s license)

Security of a digital wallet

Unlike your physical wallet, you can use settings on your mobile device to add an extra layer of security for your personal information. And it’s harder for someone to use cards loaded on your smartphone than it would be if they just found your wallet full of credit cards on the street. Plus, when you make a digital wallet payment, the transaction uses a unique code instead of your card number. Merchants don't store your account information or personal information with the transaction record which can help protect your data.

No more pesky forms

Your digital wallet comes with time-saving features. Because it saves your billing and shipping information tied to your card, apps like Google Wallet and Apple Wallet can help you breeze through online forms with a simple click to confirm your data.

Discounts and bonuses

Many closed-wallets, like Starbucks or McDonald’s, offer incentives for your purchases by rewarding you with points you can redeem for in-store products. Often, they reward users with special discount days or events to earn double- and triple-points. You can usually access the information at-a-glance within your digital wallet app.

Did you know?

With a Discover credit card, you earn unlimited rewards on every purchase—automatically.

Compare Discover Cards

Costs of a digital wallet

Digital wallets bring a lot of convenience at no extra cost for most transactions, giving you a seamless and straightforward experience. While certain scenarios, like loading a prepaid card, might incur a flat fee, the overall ease of using a digital wallet makes it a cost-effective choice.

Important Information >

See if you’re Pre-approved before you apply

Check Now

Next steps

See if you're pre-approved

Check Now

View all Discover credit cards

See rates, rewards and other info

Learn More