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Can You Replace Your Physical Credit Cards With Your Smartphone?

by Lottar

Image source: Getty Images

With digital wallet usage on the rise, contactless technology may become the default choice over carrying physical credit cards.

Important points

  • Digital wallets allow you to keep virtual copies of your payment cards on your mobile devices.
  • Peer-to-peer payment programs allow you to send and receive money from linked payment accounts.
  • The ongoing pandemic has contributed to the need for contactless payment options.

We’ve come a long way since the 1990s when cell phones first became a popular accessory. With every technological advance, our smartphones become less of a luxury and more of a central part of our lives.

More recently, digital wallets and P2P payment applications have become popular, partly due to the pandemic and the increasing need for contactless payments. A 2021 study by Visa showed that 74% of small business owners surveyed expected consumers to continue to prefer contactless payments after the wide release of a COVID-19 vaccine. A recent Chase survey echoed similar sentiments, with 73% of respondents agreeing that contactless payments are more convenient than other payment methods.

But can your phone replace carrying those plastic (or metal) credit cards in your wallet or purse? Possible.

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Smartphone payment technology

It seems like every week or month there’s a new way to access or spend money with your smartphone. Here’s a look at some of the technologies that have become more popular options for contactless transactions among consumers in recent years.

Digital wallets

A digital wallet, or mobile wallet, lets you add payment card information to your mobile devices for payment in stores and online without requiring your physical credit or debit card. It essentially turns a smartphone into a wallet, so individuals no longer need to carry cards on their person.

To use a digital wallet, simply add your information to the wallet of your choice on your mobile device, then open it when it’s time to pay. The process varies depending on the digital wallet you use. You may need to pull up and scan a QR code or tap your phone to a contactless payment processing device during checkout. Digital wallets create contactless payment opportunities instead of having to swipe or insert a physical payment card.

Digital wallets include:

  • Apple Pay
  • Google Pay
  • Samsung Pay
  • Fitbit Pay
  • Garmin Pay

Peer-to-peer payment programs and other digital payment options

Peer-to-peer (P2P) payment applications have become a mainstay in our daily lives, making it easier to send and receive money between friends, family and businesses. These apps allow you to transfer funds with other people almost instantly through linked bank accounts and credit cards. P2P payment programs include:

Restaurants like Starbucks and Chick-fil-A have also entered the digital payment space with the ability to add payment cards directly within their mobile apps. Instead of pulling out your credit card to enjoy your pumpkin spice latte, you can just open the Starbucks app and scan your card or prepaid gift card.

Some credit card issuers now provide virtual card numbers so consumers can shop online without exposing their credit card numbers. As you make purchases, the card company generates an alternate card number to protect your information as an additional level of protection.

“Buy now, pay later” services have also become an alternative to using a credit card for online purchases. These installment loans allow you to make online purchases, pay a portion at checkout and split the balance over several equal payments.

Can you replace your physical credit cards with a smartphone?

While some individuals may prefer to use “real” cards or cash to pay for purchases, it’s relatively easy to set up your smartphone, depending on the device, to handle most of the financial transactions in your life. You can seemingly replace credit and debit cards through digital wallets, P2P payment applications, automatic transfers and virtual card numbers.

Advantages and disadvantages of using your mobile phone for payment

As much as we love technology, there are both advantages and disadvantages to using your mobile phone to make financial transactions.


  • Comfort: Using your mobile phone is more convenient than pulling out your wallet and encourages contactless transactions.
  • Security: Digital Payments uses data encryption and other security measures to protect your information.
  • Multiple options: There are several digital wallets available now, so there is likely to be one that fits your needs.


  • Options can be limited: Various digital wallets and other payment services are available, but this may depend on your mobile phone’s operating system and manufacturer.
  • Overspending: Removing the physical act of pulling out your credit card at a store may cause some consumers to spend more impulsively.
  • Fees: Some digital wallets may charge a fee to use payment services.

Should you ditch your credit cards?

Don’t toss or shred those credit cards, even if you’ve switched to using your phone for all payments. You never know when you might need it, especially if your phone is lost, stolen or damaged, or you lose the ability to pull up your wallet temporarily. Technology isn’t perfect, so it might be a good idea to have a physical card handy.

You don’t necessarily have to carry them with you all the time. You can tuck them away somewhere in your house for safe keeping. And be sure to protect yourself and the information stored on your phone to ensure your payment information doesn’t end up in the wrong hands.

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