Want to Make a Mobile Payment? Here’s Everything You Need to Know about Digital Wallets
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Want to Make a Mobile Payment? Here’s Everything You Need to Know about Digital Wallets

Digital wallets have evolved far beyond 2017. What you need to know in 2025

August 1, 2025

In 2017, Apple Pay, Samsung Pay and Android Pay were novel ways to pay by tapping a phone. Today digital wallets are built into every major smartphone and wearable, they store far more than payment cards, and they underpin new forms of identity, transit and peer-to-peer payments. But they are not foolproof. Criminals have adapted with SIM swap attacks, malicious QR codes and fake wallet apps. Before you tap to pay, here is an in-depth look at how digital wallets work in 2025, what they can do, what risks remain and where North Carolina consumers can turn for help.

How modern digital wallets work

Every major mobile platform now includes a native wallet app: Apple Wallet on iOS and watchOS, Google Wallet on Android, Samsung Wallet on Galaxy devices, and wearable options like Fitbit Pay and Garmin Pay. These apps rely on one of two secure methods to protect your card data:

  • Secure element (SE) A tamper-resistant hardware chip in your phone or watch that stores encrypted payment tokens.
  • Host card emulation (HCE) A software-based approach that uses device keys and cloud tokens to simulate a secure element.

When you add a credit or debit card, the wallet contacts your bank or card network to create a one-time use token. This token replaces your actual account number. Every transaction uses a dynamic cryptogram, preventing replay attacks and skimming. You unlock the wallet with Face ID, Touch ID, fingerprint, PIN or other biometric. Then you simply tap your device on a contactless reader or scan a QR code to complete payment.

Features beyond payments

Digital wallets now store a wide range of items that were unimaginable eight years ago:

  • Transit passes Prepaid and postpaid transit tickets for buses, trains and ferries in major cities. Wallet apps can integrate fare capping, so daily and weekly limits apply automatically.
  • Digital IDs and driver’s licenses Apple and Google Wallet support ISO-standard digital credentials. North Carolina’s DMV began offering digital driver’s licenses in Wallet in 2023. These are issued with cryptographic security and accepted at airports checkpoint pilots.
  • Access keys Hotel room keys, office building badges and even smart home locks can be added to Wallet and activated by remote provisioning.
  • Health records and vaccination cards Secure Verifiable Credential formats allow you to add certified health information that can be presented with controlled privacy via selective disclosure.
  • Event tickets and boarding passes Airline and stadium passes now use dynamic barcodes that update over time and support real-time updates (gate changes, seat upgrades).
  • Peer-to-peer payments Apple Pay Later and Google Pay’s peer payment features let you send money instantly to friends and family within the wallet ecosystem, often with zero fees.
  • Buy Now Pay Later (BNPL) Integrated financing options let you split purchases into interest-free installments directly at checkout with real-time underwriting.

Improved security and remaining risks

Digital wallets have greatly improved security compared to physical cards, but they still face threats:

  • Tokenization and dynamic CVV: Each token is valid only for one merchant or transaction type. Dynamic CVVs change every few minutes for online payments.
  • Biometric locks and kill switches: Modern wallets include automatic device lockout after failed attempts and remote kill switches via “Find My” or “Find My Device.”
  • SIM swap attacks: Criminals can hijack your phone number to bypass SMS-based two-factor authentication. Always use app-based authenticators or hardware keys instead.
  • Fake wallet apps and phishing QR codes: Only install wallets from official app stores and avoid QR codes from untrusted sources. Verify URLs before approving any payment.
  • Skimming at rogue terminals: While tokenization protects in-store taps, malicious NFC readers can attempt replay attacks. Keep software updated to receive the latest protocol patches.

Choosing the right wallet

North Carolina consumers have several options. When selecting a wallet service or device, consider:

  • Native vs third-party: Apple, Google and Samsung Wallets are integrated at the OS level with hardware-backed security. Third-party wallets may lack secure element support.
  • Device compatibility: Ensure your phone, watch or wearable supports the required secure element or HCE standard. Look for EMV Contactless Level 1 and Level 2 certifications.
  • Bank and network support: Most major banks and credit unions in North Carolina offer direct wallet provisioning. Verify with your issuer that they support network tokens and remote provisioning.
  • Privacy policies: Native wallets do not log your transactions. Third-party wallets may collect analytics, review their privacy statements carefully.

North Carolina resources and consumer protections

  • NC Attorney General Consumer Protection Division: For complaints about unauthorized charges or deceptive payment apps, visit ncdoj.gov/consumer or call 919-716-6000.
  • NC Department of Commerce Financial Services: Information on digital payment safety and regulated money transmitters at nccommerce.com/finance.
  • Federal Trade Commission: Report wallet-related fraud and identity theft at reportfraud.ftc.gov.
  • Federal Communications Commission: For consumer inquiries about mobile transmissions and SIM security, visit fcc.gov/consumers.
  • Local bank and credit union branches: Many NC institutions host free digital wallet setup and security clinics, check your local branch website.

Best practices for safe mobile payments

  • Always use biometrics or a strong passcode to unlock your wallet.
  • Keep your operating system and wallet app up to date to receive security fixes.
  • Avoid storing sensitive documents (full Social Security number, unencrypted IDs) in your wallet.
  • Monitor transactions via your bank’s app and enable instant notifications for all charges.
  • Use app-based authenticators or hardware tokens for any two-factor authentication.
  • Log out of merchant checkout screens when using shared or public devices.

Digital wallets have transformed payments, transit and identification, but they require the same vigilance as any financial tool. By choosing native wallet apps, enabling hardware-backed security, using app-based authentication, and tapping into North Carolina’s consumer protection resources, you can enjoy faster, more convenient transactions with confidence in 2025.