Advances in tech make buying things faster and easier, especially with digital wallets or “e-wallets”. Digital wallets speed things up by allowing you to use an app on your phone to pay for things. And with that speed comes some risks, like with many other digital payment methods.
With info from the Office of the Privacy Commissioner of Canada, we’re going to cover what happens when you use your digital wallet, what this means for your privacy, and what to do about it.
First, what is a digital wallet?
A digital wallet is an app on a smart phone or a watch where you can pay for products quickly through your device (examples: Apple Pay, Google Pay, etc.).
How does it work?
- Your payment info is stored on a secure chip on your phone or on the digital wallet providers’ server
- The information is encrypted and “one-time security codes” are created to verify each payment transaction
- It may require your fingerprint, password, or use facial recognition before making the purchase
- Some payment models use a photo or your camera to confirm your identity before making a purchase
- Additionally, some e-wallet providers offer the ability to store your boarding passes for a flight, tickets for a movie, and more
What personal info am I sharing when I pay on my smart phone?
These are some examples of what info may be used or shared when you buy something on your digital wallet (these will vary between providers):
- Credit card data
- Loyalty cards/gift card information
- Location
- Unique info about your phone
- Contacts
- Shipping information
- Biometrics: facial recognition and fingerprint identification
What happens to this personal information?
Your personal information can be used or shared in a number of ways. For example, your info may be shared with:
Retailers and reward or loyalty programs.
This may allow them to track your purchase history and tie it to any other information they already have on file.
Data brokers and marketers.
They may purchase data about consumers from retailers or loyalty/reward programs.
Financial institutions, payment card network operators, and payment processors.
They may create a profile based on your purchase history and use it for fraud management, marketing, or targeting services.
Tips to keep your personal info safe
Read privacy policies and terms of service agreements.
This fine print informs you how your personal info is used or shared when you make a purchase.
Find out how third-party companies are involved.
This may include retailers, banks, credit card companies, payment terminals, loyalty/reward companies, and data brokers. Do some research and, if anything is unclear, ask your digital wallet provider questions about how your information is being used and shared.
Opt out when possible.
Consider opt-outs from tracking and profiling for marketing or other purposes.If opting out is not in the privacy policy or terms and conditions, contact the provider to ask about your opt-out options.
Ask about the use of biometrics.
If your fingerprint or face is used to validate a purchase, ask what is being done with that information and how it is stored and protected. There is no one way that payment apps collect, use, or disclose this information – so ask the question.
Keep up to date.
Some digital wallet services specify that they will not use your personal information but be aware that these policies can change over time. It’s important to look for updates and remember to read the fine print.
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About Consumer Protection BC
We are responsible for regulating specific industries and certain consumer transactions in British Columbia. If your concern is captured under the laws we enforce, we will use the tools at our disposal to assist you. If we can’t help you directly, we will be happy to provide you with as much information as possible. Depending on your concern, another organization may be the ones to speak to; other times, court or legal assistance may be the best option. Explore our website at www.consumerprotectionbc.ca.
Problem is that the minimum wage kid doing the sale probably has no idea how the company he works for will protect their privacy with a digital wallet. Best to just never use one…
Hi Russel, thanks for your comment. You’re right, I would definitely suggest contacting the provider directly to inquire about security and privacy info. Generally speaking, there should be someone you can talk to that addresses those kinds of inquiries and is knowledgeable on what personal info is shared and to who.