Are Digital Payments a Safer Way to Pay?

June 6, 2025

Digital payment services boast security features that go above and beyond traditional payment methods. Here's what to know about the most common services.

The convenience of electronic payments is one reason 55% of high earners use digital wallets, which store payment information on mobile phones or online, according to a 2024 survey by pymnts.com. Yet older consumers have been relatively slow to adopt electronic payment options, citing privacy and security concerns as reasons for sticking with cash, checks, or physical cards.¹

"Ironically, electronic payments are now considered the safer option," says Lisa Lang, a senior manager with Schwab's Financial Crimes Awareness team—especially given that check fraud, in particular, has nearly quadrupled since the pandemic.²

What's more, many digital payment services offer a bevy of safety features on top of what your bank or credit card company provides, including:

Authentication, including both two-factor authentication—which requires a one-time code in addition to your password—and biometric authentication, such as scanning your face or fingerprint.
End-to-end encryption, which masks your card and transaction information until it's decrypted at its intended destination.
Tokenization, which provides a merchant with a one-time token rather than your actual card information.

"For many people, it's a question of when, not if, they'll be impacted by financial fraud," Lisa says. "It can take a minute to get up to speed on some of the newer payment technologies, but their security and convenience are hard to beat."

Wallet 2.0

Here are some of the more common electronic payment options and how they work.


Type	Features	Caveat emptor	Getting started
Digital/Mobile wallets—including Apple Pay, Google Pay, PayPal, and Samsung Pay.	- Credit and debit card information is kept in a virtual wallet that can be used in-store, online, and even to exchange funds among other users. - Boarding passes, e-tickets, membership cards, and other digital documents can often be securely stored (though PayPal doesn't allow this).	- If you lose access to your phone or smartwatch, you'll need your physical card to make in-store purchases. - Most devices support only their own wallets. - Few in-store terminals accept PayPal.	- Mobile wallets come preinstalled with most smartphones. You'll be prompted to sign in, set up additional authentication, and add your cards. - For PayPal, you can go online or download the app to create an account and security passkey and add your cards.
Online payment processors—including Amazon Pay and Shop Pay.	- Payment, shipping, and other information can be saved for seamless online checkout.	- Security involves two-factor but not biometric authentication. - Shop Pay is available only at outlets that use the Shopify platform.	- Log in to Amazon Pay using your Amazon credentials to use payment and address information already stored there. - Sign up for Shop Pay with your email and phone number, then save your address and cards for easy checkout.
Peer-to-peer payment apps—including Cash App, Venmo, and Zelle^®.	- Money can be securely transferred between individual bank accounts—and, in the case of Cash App and Venmo, those of participating vendors.	- You may not be able to recover funds sent in error. - Each app has limits on the dollar amount you can send within a given time frame.	- Download the Cash App or Venmo apps, create an account, then link your checking account. - Sign up for Zelle through your participating bank's app.

Source:

Charles Schwab using information from Amazon, Apple, Cash App, Google, PayPal, Samsung, Shop Pay, Venmo, and Zelle.

Learn more about using Zelle^® through the Schwab Mobile app.

¹"Got Leather? Almost a Third of Consumers Prefer Carrying Physical Wallet," pymnts.com, 04/03/2024.

²"Treasury Announces Enhanced Fraud Detection Process Using AI Recovers $375M in Fiscal Year 2023," U.S. Department of the Treasury, 02/28/2024.

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Financial Planning Fraud Prevention

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

All names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Zelle^® and the Zelle^®-related marks are wholly owned by Early Warning Services, LLC and are used herein under license. The Charles Schwab Corporation is not affiliated with Zelle^®.

To send or receive money with Zelle^®, both parties must have an eligible checking or savings account. Transactions between enrolled users typically occur in minutes.

Payment requests to persons not already enrolled with Zelle^® must be sent to an email address.

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Are Digital Payments a Safer Way to Pay?

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