Digital wallets are now preferred by many over physical payment cards and cash, as digital wallets enable you to pay for goods and services using a smartphone or smartwatch.
What Is a Digital Wallet?
A digital wallet is an application or online platform that allows users to store, manage, and conduct various financial transactions electronically. This includes payments, money transfers, purchases, and more. Digital wallets replace the need for physical cash by storing bank card information or electronic balances.
Security and convenience are its advantages, with quick access through mobile devices. With the advancement of technology, digital wallets are becoming increasingly popular and playing a crucial role in the shift towards more efficient non-cash transactions.
Digital wallets use NFC to facilitate contactless payments. NFC has been around for some time, originating from RFID (Radio Frequency Identification). Today, NFC is most recognized for its use in contactless payments. If you’re using any digital wallet for contactless payments at a terminal, you’re using NFC.
Is a Digital Wallet Secure?
When handling your money, you want to ensure that any application you use for this purpose is trustworthy. So, what are the pros and cons of security associated with these applications?
Advantages of Digital Wallets
Leading digital wallet providers are aware that they handle sensitive customer information through their applications and have taken necessary steps to ensure the security of this information.
Many digital wallet applications use encryption protocols to protect payment information. Encryption is a method used to transform plain text into random code, thus concealing the actual data being stored.
Read More : The Clean Code
Digital wallet providers like Samsung Wallet encrypt data transferred from one location to another. For instance, when you add a card to your Samsung Wallet, payment information is encrypted before being sent to Samsung’s servers.
Digital wallet applications often issue tokens for payments to safeguard your money. For example, when making a transaction through Google Wallet, the application generates a unique token for that payment value.
Risks of Digital Wallets
One of the most prominent vulnerabilities of digital wallets is the use of NFC. Since NFC facilitates wireless payments, there is always a risk of attacks aimed at stealing funds via NFC. This can be done in various ways, including by approaching the victim’s device and intercepting the data being used and transferred.
Although the attacker must be very close to the victim’s device to do this, it remains a possibility and, therefore, is something to be mindful of.
Although the attacker must be in close proximity to the victim’s device to carry out this, it is still a possibility and, therefore, something that needs to be considered.
Since digital wallets solely rely on technology to function, technical malfunctions are also a potential concern. While technical failures may hinder your ability to use your wallet or merely slow things down, they can also result in security breaches, which can jeopardize your stored payment information.