Are Mobile Wallets Going to Replace Credit Cards?

Canada’s Metrolinx service now allows customers to use contactless payments to pay their fare on the UP Express line from Toronto’s business district (Union Station) to Pearson International Airport. As more services start to support mobile wallets, is Canada ready to leave physical credit cards behind?

In some ways, the contactless payment revolution is just getting started. Sure, platforms like Google Pay and Apple Pay have been available for years, but only now are they are moving into the mainstream. As more services adopt digital payments, linking a credit card to a mobile payment platform will add a layer of convenience for customers.

Credit cards are fundamental to the financial life of many Canadians, which is why RATESDOTCA recommends comparing cards online to find the best deal.

Giving Customers More Choice

Metrolinx says by offering contactless payment solutions, customers have more ways to pay for fares on the UP Express train line. As well as accepting traditional credit card payments (alongside debit card and cash), the service now allows customers to pay with their AMEX, Mastercard, or Visa through mobile wallet solutions.

It’s that convenience that makes services like Apple Pay and Google Pay popular, although there are some other benefits:

  • Security – One of the fundamental issues with credit cards has always been security. Not on a payment level, financial institutions go to great lengths to ensure transactions are safe. However, because credit cards are physical products, they are vulnerable to theft and fraud. Mobile wallets remove pin numbers, CVV, and other details, making transactions more secure and anonymous.
  • Saving time – We’ve already mentioned convenience as a big benefit of mobile wallets, but it’s a point worth expanding on. Platforms like Apple Pay and Google Pay are more efficient because they are a one-step process. You don’t need to wait for the vendor to input your credit card or wait for a machine to respond.

Of course, nothing is perfect, so it is worth understanding that mobile wallets also have some negatives:

  • Availability – Despite the growth of mobile wallets, the reality is the majority of people still don’t use them. This is unlikely to change soon because some people simply lack access to mobile wallets, either through not owning a smartphone, or not having a mobile contract. That said, mobile wallets are increasingly accepted in most retail locations in Canada.
  • Technology – Mobile wallets are completely reliant on technology. While Apple Pay and Google Pay urge us to leave the credit cards at home, what happens if your smartphone dies, or you lose internet when trying to pay for something? While technology will only improve in the future, there are limits that are worth considering.

Are Mobile Wallets Replacing Credit Cards?

A quick search on the topic of mobile wallets will tell you they will one day replace credit cards. However, “replace” is the wrong word because mobile wallets are not designed to be a substitute for your credit card, but rather an extension of it. In other words, you still need credit card details for the mobile wallet to function, because services like Google Pay and Apple Pay tap directly into your cards.

In fact, mobile wallets provide a way for credit cards to remain relevant in the digital age. For decades, credit cards have been a preferred payment method for most people. In recent years, the emergence of digital solutions like PayPal and other e-wallets threatened credit cards as the transaction king.

Mobile wallets provide the best of both worlds. Customers still get to pay via credit card and receive benefits like monthly payments, cash back, and other perks, while also having the security and anonymity of digital platforms.

What does this mean for the future of physical cards? Well, it is looking increasingly like the future is digital, but don’t expect the plastic in your wallet to go extinct just yet. Millions still don’t have the available technology to efficiently use mobile wallets, while many retailers don’t support services like Apple Pay and Google Pay.

Still, there’s no denying the benefits that come from digitizing your credit card through a mobile wallet. It has not escaped the attention of banks, who will look to tap into the growing mobile wallet market. This could come in the form of deeper partnerships with mobile wallet providers, or banks going it alone and creating their own digital wallet solutions.

Shopping for Credit Cards Makes Sense

It’s clear that the credit card is here to stay, whether you’re a traditionalist with your plastic card, an innovator using a mobile wallet, or somewhere in between. Whichever you choose, you’ll want the best credit cards for payments both online and in physical stores. That’s why shopping for the top credit cards is something you should be doing. By comparing credit cards online, you can find the best deals on cards that meet your specific needs.

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Tim Spafford

Tim Spafford

Tim is a student who works hard to get a degree in finance and build a successful career in business consulting. Being a student and living in London Tim has a real-life experience in budgeting, saving, money making, traveling and having fun.