What is a key feature of mobile wallets?
a) They have no fees.
b) They store cash.
c) They keep card information secure.
d) They can only be used in stores.
The correct answer and explanation is:
The correct answer is:
c) They keep card information secure.
Explanation:
Mobile wallets are digital applications used on smartphones to store payment information such as credit and debit card details, as well as loyalty cards and gift cards. A key feature of mobile wallets is that they keep card information secure, providing an extra layer of protection compared to physical cards. This security is achieved through several methods, including:
- Tokenization: When a payment is made through a mobile wallet, the actual credit or debit card number is replaced by a unique token that represents the card. This ensures that the merchant never sees the real card information, reducing the risk of fraud.
- Encryption: Mobile wallets often encrypt sensitive data, making it unreadable to unauthorized parties, whether it’s stored on the device or being transmitted during a transaction.
- Biometric Authentication: Many mobile wallets require biometric authentication (such as a fingerprint or facial recognition) before completing a transaction, ensuring that only the authorized user can access the wallet.
- Two-Factor Authentication: Some mobile wallets employ two-factor authentication, adding an extra layer of security, such as sending a one-time password (OTP) to the user’s phone for verification before completing a transaction.
In addition to security, mobile wallets offer the convenience of making payments without needing to physically carry cards or cash. They can be used both online and in physical stores with the support of NFC (Near Field Communication) technology.
Other options, such as “no fees” or “storing cash,” are not accurate because most mobile wallets are linked to existing payment accounts or cards, which may incur fees depending on the payment method. Similarly, cash isn’t stored in mobile wallets in the traditional sense, as they only hold digital records of payments.