Smartphones changed the financial world forever.
What once took days can now be accomplished in seconds.
With the click of a button, you can manage your savings account, make online purchases, pay credit card bills, and deposit checks from anywhere in the world.
Digital wallets and mobile banking have made such advances possible.
But what’s the difference between the two?
While the terms sound similar, digital wallets and mobile banking aren’t the same thing.
In fact, they have several defining features that are worth knowing.
Today, we’ll explore the fundamentals of digital wallets, mobile banking, and everything in between.
Let’s get started!
What is a Digital Wallet?
A digital wallet is simply an electronic version of a traditional wallet.
It’s your cash and credit cards — in digital form. After all, a digital wallet stores your credit and debit card information right on your smartphone and tablet.
Whether you’re shopping in-store or online, you can complete payments in seconds — without needing to carry physical cash, checks, or cards.
To engage in contactless payment, all you have to do is tap or hover your smartphone (or smartwatch) over the point-of-sale (POS) terminal.
This process is called NFC, or “near field communication.”
As you might expect, digital wallets are immensely popular around the globe. In fact, over 2.8 billion digital wallets are used worldwide.
Apple Pay, Google Pay, and Samsung Wallet rank among the most popular options, especially in the United States.
What drives digital wallet popularity? Convenience.
While streamlining contactless payments, digital wallets can also store items including:
- Boarding passes
- Concert tickets
- Gift cards
- Hotel reservations
- Coupons and rewards cards
Despite these advantages, some consumers question the security of digital wallets.
Are they safe to use? Absolutely.
Digital wallets have built-in security features designed to conceal your personal information.
By utilizing a process known as “tokenization,” your smartphone provides merchants with a one-time-use code, rather than your individual credit or debit card number.
Nevertheless, digital wallets remain a top target for cybercriminals, especially within the realm of cryptocurrency.
To fully protect yourself, always review your monthly statements, report any suspicious activity, and employ multi-factor authentication whenever possible.
What is Mobile Banking?
Mobile banking provides total access to your bank account on a smartphone or tablet.
While this may not sound particularly groundbreaking, it’s worth remembering how banking used to operate.
Not long ago, all banking transactions happened in person. There was no way around it.
If you needed to withdraw cash or make a deposit, you had to physically visit your local bank
branch during store hours.
Those days are long gone, as smartphones have made banking a fully remote, 24/7 service.
That’s why brick-and-mortar bank branches are closing all across the country.
Just twenty years ago, there were over 8,000 physical banks in the United States. As of last year, however, that number has been nearly cut in half.
Mobile banking is more than a convenient option — it’s the future of financial services.
After all, it empowers consumers to:
- Track expenses
- Pay bills remotely
- Build budgets
- Check FICO® scores
- Find ATM locations
- Report fraudulent activity
- Deposit checks
- Transfer funds
- Apply for credit products
Depending on your financial institution, you may also be able to manage investment accounts from your bank’s mobile app.
And how secure is mobile banking? Very secure.
Mobile banking platforms utilize end-to-end, encrypted software to protect your personal information. If suspicious activity ever occurs, banks will provide push notifications via email and text to alert you.
Though mobile banking is generally quite safe, there are several ways to fully protect yourself:
- Avoid accessing your mobile banking apps when using public Wi-Fi.
- Be sure to leverage advanced security features including Face and Touch ID, complex passwords, and multi-factor identification.
- Look out for phishing websites and messages from scammers, and never provide your personal financial information to anyone (even if they claim to be your bank).
As always, if anything ever appears suspicious or fraudulent within your account, contact your bank immediately.
Mobile Banking vs. Digital Wallets: Key Differences
Who wins in the battle between mobile banking vs. digital wallets?
That’s a trick question, because both tools work best in tandem. They’re interdependent.
After all, a digital wallet operates within the framework of a mobile bank.
So…what’s the difference between digital wallets vs. mobile banking?
It’s simple: a mobile bank enables you to manage your money, while a digital wallet empowers you to spend it.
As we’ve discussed, your mobile banking app unlocks access to a range of nuanced features. ,
For example, you’ll be able to do things like transfer funds from your savings to your checking account, pay your monthly credit card bills, and check your FICO® score.
While those tools are essential, they won’t be able to help you buy groceries, fill up at the gas station, or make a quick purchase on Amazon.
That’s where your digital wallet comes into play.
Plus, if you’re headed to the airport or a concert, you’ll be able to use your digital wallet to easily scan your tickets.
This begs an important question: can you use a digital wallet instead of a bank account?
Yes, while it’s possible to do, it’s not recommended — for several reasons.
For one thing, a bank account provides a great place for your savings to grow. In fact, with a high-yield savings account, your money can grow up to 5% a year — just by sitting there.
If you left a significant amount of cash in your digital wallet, it may certainly be convenient, but it won’t earn any interest.
As inflation rises, that money will steadily lose its purchasing power.
More importantly, the FDIC does not insure money stored on a digital wallet — though it covers up to $250,000 per depositor in a standard bank savings account.
In other words, if something happened to your funds in a digital wallet, there’s no guarantee you’ll get it back. However, if the money is held in a bank — whether brick-and-mortar or online-only — it will be fully insured.
That’s why it’s so important to have both a mobile bank and a digital wallet.
How uLink Fits Into the Picture
Thanks to digital innovation, you can manage your money and make payments anytime, anywhere.
Nevertheless, while mobile banking and digital wallets provide valuable services, they don’t do everything.
For example, what about sending money abroad and reloading prepaid phones for your loved ones around the world?
That’s an essential service that requires an equally specialized solution.
And that’s what uLink is all about.
Our digital platform was built to facilitate “remittances” — or, in other words,
uLink helps people send money anywhere from the U.S. to over 60 countries around the globe.
This raises a key question: if we’re not a mobile bank or a digital wallet, what are our services called?
We’re a money transfer app with high security standards in the business.
All of our transactions are backed by Grupo Financiero Banorte, one of the largest and most trusted banks in Mexico and Latin America.
To further protect your personal information, the uLink app features advanced encryption systems to ensure your funds get home fast and safely — on time, every time.
Moving Forward
Mobile banking and digital wallets have made personal finance more accessible than ever.
As you research your options, aim to seek a combination of services that provide the best of both worlds: a mobile banking service that helps you manage your money, and a digital wallet that helps you strategically deploy it.
At uLink, we’re here to facilitate your money transfer needs.
With the uLink Money Transfer app, you can send money abroad with just a few taps.
To download the uLink app for iPhone, click here.
To get the uLink app for Google Play, click here.
There are many advantages to using a money transfer app like uLink.
While ensuring safe delivery, the uLink app also helps users save time and money.
That’s why we provide great exchange rates, fees starting as low as $0, and service that’s fast, reliable, and secure.
Miles from home — just moments away with uLink.
