Why Digital Wallets and Digital Payments are a Safe Alternative to Traditional Payment Methods
In the rapidly evolving world of finance, digital wallets and digital payments have emerged as a secure and convenient alternative to traditional payment methods.
Forms of payment have evolved dramatically over the years, and the introduction of the smartphone as an accessible and convenient device that can be used as a payment method is one of the newer innovations that has taken place in recent years.
At The First National Bank & Trust Company of Newtown, we offer the use of Zelle digital wallets to our customers who enjoy the convenience of online banking and mobile banking. You can make payments and transfer funds regardless of who the recipient banks with, so it’s flexible enough to use with any merchant or individual that accepts digital payments.
What are digital wallets?
A digital wallet uses encryption software to securely store your payment information on your smartphone, computer, or wearable device.
When you make a purchase, the digital wallet communicates with the merchant’s point-of-sale system or payment gateway to complete the transaction.
You can also send money to other people, using their email address or U.S. cell phone number, with transfers typically happening within minutes.
Here’s a simplified breakdown of how the process works:
- Storing Information: When you add a credit card, debit card, or other payment method to your digital wallet, the wallet stores this information securely using encryption. In most cases, it does not store your actual card number but instead creates a unique identifier or “token” for each card.
- Making a Payment: At the checkout, whether online or in-store, you select your digital wallet as the payment method. The digital wallet will use the tokenized version of your card to complete the transaction. This token is sent to the merchant, who processes it as a payment.
- Authentication: Before the payment can be made, the digital wallet often requires additional authentication, such as a fingerprint, facial recognition, or a passcode. This step ensures that only the authorized user can complete the transaction.
- Transaction Completion: Once the payment is authenticated, the digital wallet transmits the payment information securely to the merchant, and the transaction is completed. The merchant receives the payment without ever having direct access to your card details, which enhances security.
Are digital wallets secure?
Digital wallets are the next generation in digital banking security. They’re more secure than cash and even your physical credit or debit cards, because all payments through a digital wallet are encrypted and tokenized. Your credit card, debit card and other account numbers aren’t stored within your phone.
When you make a payment or transfer money to someone using Zelle, the only information the other person receives is the email address or cell phone number tied to your account. Just make sure you only use it with people you can trust.
Encryption and Tokenization
A Zelle digital wallet takes your sensitive data, encrypts it and replaces that information with a bit of digital code known as a token. A new token is generated every time you make a payment or transfer money, so the recipient can only receive your money if they have the right token that matches your payment.
Digital wallet security means that even if a store that you frequently shop at had its computers hacked, your account information would be safe if you used a digital wallet. This is because the store never receives your credit card, debit card or account information. It only receives an individual token for each payment you make to the store.
Biometric Authentication
Accessing your digital wallet typically requires either a PIN or biometric information, such as a fingerprint or facial recognition.
This offers an extra layer of security that traditional payment methods do not provide. Even if your smart phone was lost or stolen, requiring biometric authentication to access your digital wallet makes it extremely difficult for thieves to access your account.
Additionally, most digital wallets allow you to remotely disable access your account which offers another layer of security.
Fraud Prevention and Real-Time Monitoring
Digital payment platforms are equipped with sophisticated fraud detection systems that monitor transactions in real time. These systems use machine learning and artificial intelligence to identify unusual patterns or behaviors, enabling them to flag potentially fraudulent activities more quickly than traditional methods.
If a suspicious transaction is detected, customers are often notified immediately, allowing them to take swift action to protect their accounts. Digital wallets allow you to easily monitor your transactions from your smartphone, giving you instant access to your spending history. This real-time visibility can help you detect any unauthorized transactions sooner, providing you with greater control over your finances.
Convenience without Compromising Safety
Make payments with just a tap of your phone, whether you’re shopping online or in-store, without sacrificing on security. The streamlined nature of digital transactions can reduce the chances of errors or data breaches that sometimes occur with manual entry of payment details in traditional methods.
We’re committed to Your Financial Security
At The First, we offer a range of digital banking services that make it easy to access your accounts, either online or on your phone. We are committed to helping our clients manage their money in ways that are both safe and convenient.
That’s why our Digital Banking Help page offers videos and click-through demos on personal and business banking transactions on such topics as online banking, mobile banking, Zelle and others.
Our banking professionals are also available to answer your questions via email, in person at a local branch, or over the phone.