Digital wallets continue to grow in popularity, with almost half of all American consumers having used one between December 2023 and March 2024, according to J.D. Power.1
But, while digital wallets soar in popularity, the threat of online fraud still looms. The monetary losses caused by cybercriminals have spiked staggeringly from $3.5 billion in 2019 to $12.5 billion in 2023.2
This article takes a closer look at digital wallets, how they support online shopping safety, and offers practical tips on how to keep them safe against fraud attempts.
While digital wallets offer convenience, they do come with potential risks that users should be aware of, such as:
While the threat of online fraud is a concern, digital wallets are generally safe. Services, like PayPal, offer benefits that make digital wallets secure options for managing finances. For example:
The risks of using digital wallets can be minimized by following some simple security best practices.
Phishing and online fraud are significant risks for digital wallet owners. Fraudsters often use these tactics to compromise login details, potentially leading to unauthorized access to digital wallets. Here's how to help lower the chances of being hacked:
Consider these tips when creating passwords:
Multi-factor authentication (MFA) and two-factor — or 2-step — authentication (2FA) are critical tools in safeguarding a digital wallet. These methods work by requiring not just a password but also an additional form of verification, such as a code sent to a mobile device or a fingerprint scan, before granting access to an account.
Keep devices and software updated to help maintain digital wallet security. Software updates often include patches for vulnerabilities that hackers could exploit.
The network a device is connected to can be a significant weak point. Hackers and fraudsters can exploit public Wi-Fi networks to harvest confidential information, including digital wallet details. It's important to avoid using public Wi-Fi for transactions and opting for a secure, private network when possible.
If there is reason to believe a digital wallet has been compromised, swift action is essential. Here are the steps to take:
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