Can You Replace Your Physical Credit Cards With Your Smartphone?

A person holding their smartphone over a payment reader held out by a shop employee.

Image source: Getty Images

We've come a long way since the 1990s when cell phones first became a popular accessory. With every technological advance, our smartphones become less of a luxury and more a central part of our lives.

More recently, digital wallets and P2P payment apps have gained popularity, partially 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 after the wide 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.

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But can your phone replace carrying those plastic (or metal) credit cards in your wallet or purse? Possibly.

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 couple of years.

Digital wallets

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

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

Digital wallets include:

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

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

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

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

Some credit card issuers now provide virtual card numbers so consumers can shop online without exposing their credit card numbers. As you make purchases, the card company generates an alternative card number to shield your information as an added 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 a portion during checkout and splitting up the balance over several equal payments.

Can you replace your physical credit cards with a smartphone?

While some individuals will probably 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 seemingly replace credit and debit cards through digital wallets, P2P payment apps, automatic transfers, and virtual card numbers.

Pros and cons of using your cell phone for payment

As much as we love technology, there are both benefits and drawbacks to using your mobile phone to make financial transactions.


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


  • Options could be limited: Several digital wallets and other payment services are available, but it may depend on your mobile device's operating system and manufacturer.
  • Overspending: Removing the physical act of pulling out your credit card at a store could cause some consumers to spend more impulsively.
  • Fees: Some digital wallets may charge a fee to utilize payment services.

Should you ditch your credit cards?

Don't toss or shred those credit cards, even if you've switched to using your phone for all payments. You never know when you might need them, especially if your phone is lost, stolen, or damaged, or you lose the ability to pull up your wallet temporarily. Technology isn't perfect, so having a physical card on hand could be a good idea.

You don't necessarily have to carry them with you all the time. You can sock them away somewhere in your home for safekeeping. And be sure to protect yourself and the information stored on your phone to ensure that your payment information doesn't end up in the wrong hands.

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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. None has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Apple, JPMorgan Chase, PayPal Holdings, Starbucks, and Visa. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple, short March 2023 $130 calls on Apple, and short October 2022 $85 calls on Starbucks. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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