Can you replace your physical credit cards with your smartphone?

Can you replace your physical credit cards with your smartphone?

A person holding their smartphone above a payment reader held by a store employee.

Image source: Getty Images

With the rise in the use of digital wallets, contactless technology may become the default choice over physical credit cards.

Key points

  • Digital wallets allow you to keep virtual copies of your payment cards on your mobile devices.
  • Peer-to-peer payment apps 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 became a popular accessory. With every advancement in technology, our smartphones become less of a luxury and more of a central part of our lives.

More recently, digital wallets and P2P payment apps have grown in popularity, in part due to the pandemic and the increased 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 following the widespread 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? Maybe.

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Smartphone payment technology

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

Digital wallets

A digital wallet, or mobile wallet, lets you add payment card information to your mobile devices for in-store and online payment without needing your physical credit or debit card. It essentially turns a smartphone into a wallet, so individuals no longer have to carry cards on them.

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

Digital wallets include:

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

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

Peer-to-peer (P2P) payment apps have become a mainstay of 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 via linked bank accounts and credit cards. P2P payment applications include:

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

Some credit card issuers are now providing 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 purchases online, paying part at checkout and dividing the balance into equal installments.

Can you replace your physical credit cards with a smartphone?

While some people will likely continue to prefer using “real” cards or cash to pay for purchases, it’s relatively easy to set up your smartphone, depending on the device, to handle most financial transactions in your life. You could apparently replace credit and debit cards with digital wallets, P2P payment apps, 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 pros and cons to using your mobile phone to conduct financial transactions.


  • Convenience: Using your cell phone is more convenient than pulling out your wallet and encourages contactless transactions.
  • Security: Digital payments use data encryption and other security measures to protect your information.
  • Multiple options: There are several digital wallets available right now, so there’s probably one that meets your needs.

The inconvenients

  • Options may be limited: Several digital wallets and other payment services are available, but this may depend on the operating system and manufacturer of your mobile device.
  • Overspending: Removing the physical act of picking up your credit card at a store could encourage some consumers to spend more impulsively.
  • Costs: Some digital wallets may charge fees to use payment services.

Should you give up your credit cards?

Don’t throw away or tear up those credit cards, even if you’ve opted to use your phone for all payments. You never know when you might need it, especially if your phone is lost, stolen or damaged, or if you temporarily lose the ability to withdraw your wallet. The technology isn’t perfect, so having a physical map on hand might be a good idea.

You don’t have to carry them with you all the time. You can store them somewhere in your house to keep them safe. 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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