Digital Wallet

By
Attorney

A virtual wallet, sometimes referred to as a "digital wallet," is an electronic version of the papers, credit cards and other items in your wallet. It allows you to access all of your information on your computer and on your smart phone.

A Virtual Wallet Explained

A virtual wallet is, as it sounds, not a tangible wallet. In fact, it is not even a piece of computer hardware. Rather, a virtual wallet is software that contains the items in your regular wallet. It holds your payment information, address, identification cards, gift cards, loyalty membership cards and even your Social Security number and card for your use. Another main component of these programs is their ability to store your passwords for websites or bank accounts.

Many virtual wallets can be downloaded to your smart phone. However, you cannot use your phone to complete your purchase.

Phone with money

How these Wallets Work

A virtual wallet runs in the background whenever you use your computer. When you shop online, it recognizes the programs in which it can automatically enter your information and asks whether you would like it do so. It inputs the information you allow it to add, which may include your payment information.

The purpose of these wallets is to reduce the amount of time it takes you to purchase items online. By automatically completing the information requested by merchants, as well as providing payment information, you can complete purchases faster.

Consider it this way: currently, you most likely have permitted some websites to retain and automatically use your personal information to complete future purchases. With a digital wallet, you extend this service to every website, even those with which you do not have an account.

Virtual Wallet vs. Wallet in the Clouds

Sometimes, you may hear the term "wallet in the clouds" being tossed around simultaneously with a virtual wallet. Although the two terms are similar, they are by no means the same. With a virtual wallet, your information is stored on your computer. In contrast, a "wallet in the clouds" is a virtual wallet in which your information is on the provider's server.

Additionally, you can use a wallet in the clouds on any electronic device. This means that you can walk up to an item containing a barcode and, if the merchant allows electronic payments, pay for it using your phone.

What Virtual Wallets Mean for Credit and Debit Cards

Virtual wallets make the process of paying for an item using a credit or debit card much faster. With these programs, you only have to allow your computer to complete the information the website requests and identify the payment method you want to use - which your computer also automatically enters. Essentially, they allow you to reduce the amount of effort you use to purchase an item online. Because most online merchants accept debit or credit cards, this also means that your use of your debit and credit cards will be much easier.

However, virtual wallets also increase the chances for your personal information to be stolen. Because they are on your computer, despite their being password protected, it is still possible for a hacker to steal your personal information.

Companies Offering Virtual Wallets

The concept of a virtual wallet is still developing, but many companies claim that their products will be up and running before the end of 2011. In fact, many companies claim that virtual wallets will be commonly used as soon as 2013.

  • e-Wallet: This program is usable on PC or Macintosh computers. It allows users to store their passwords, calling cards, credit and debit cards, health information and membership cards on it. Users can customize their wallet to make it easier to identify the cards or other information they regularly use. Another added feature is a single button cancelation service that allows users to simultaneously cancel all their cards if their wallet is stolen.
  • Google Wallet: This virtual wallet will also contain "wallet in the clouds" capabilities. On it, users can store their banking and personal information.
  • Visa Digital Wallet: This program, set to be released in the fall of 2011, allows users to pay online with a single click. Users can use it to shop and find deals on their favorite products and pay for items online with a single click of their mouse button.

Using Your Virtual Wallet

Using a virtual wallet may allow you to make online purchases faster. In the future, it appears as though tangible wallets will be combined with "wallet in the clouds" to enable you to use your cell phone to complete in-person purchases.

Before entering personal information into one of these programs, however, ensure that it is adequately protected. This will make it less likely that your information will be stolen.