Executive Summary
Digital wallets have emerged as a critical gateway to financial services, with 29% of Americans now using a digital wallet at least weekly. While this digital transformation offers convenience and increased access, it also presents unique challenges and opportunities for financial inclusion.
This study builds on CR’s recent evaluations of peer-to-peer (P2P) payment apps; buy now, pay later (BNPL) services; and banking apps by applying CR’s Fair Digital Finance Framework to evaluate digital wallets. We evaluated the digital wallets across six principles of the Framework: Safety, Privacy, Transparency, User-Centricity, Support for Financial Well-Being, and Inclusivity. This evaluation explores the apps, websites, and features related to digital wallets of six companies: Apple, Cash App, Google, PayPal, Samsung, and Venmo. Though each company offers its own blend of specific services and features, they all deliver a similar core service: the ability to make contactless payments, and peer-to-peer (P2P) transfers (except Google).
We identified 14 key findings based on those evaluations.
Findings
- Digital wallets use comprehensive technical security measures to protect users. All of the digital wallets use comprehensive technical security measures to protect users and transactions. However, not all apps require users to authenticate when viewing sensitive information, making a payment, or sending a P2P transfer.
- The responsibility for fraud monitoring and liability protection varies depending on the service and the transaction. The approach to fraud monitoring and liability protection differs across wallet providers in a way that may not be clear to consumers. Pass-through wallets do not commit to comprehensive fraud monitoring; staged wallets do.
- Applicability of FDIC insurance varies. For all of the digital wallets that enable users to store funds, users must take additional steps for their funds to be eligible for FDIC insurance. Often, they must either register their account by verifying their identity or use one of the company’s other services
- Most companies do not practice data minimization. Because of the nature of the services provided, digital wallets have reason to collect, use, and share sensitive information, such as identification data like Social Security numbers and financial information like transaction data. But Consumer Reports believes that companies that offer digital finance services, including digital wallets, should adhere strictly to data minimization principles, and that secondary uses of data should be limited to fixing errors and performing internal research for the purpose of improving customer experiences. Most of the companies evaluated do not meet this standard.
- Apps could make it easier for users to control their privacy and exercise their data rights. There is room for improvement across all apps to leverage technology to make it easier for users to control data selling, data sharing, and targeted advertising, and to exercise their data rights.
- Companies transparently explain app features, but could more transparently describe the risks of using the services. The companies are very transparent about the various features offered by their apps, both in legal documentation and in the app store. However, the companies should improve their communication of the risks of using the services.
- Although fees are clear in the transaction flow, they should be shared more prominently during onboarding. Most companies that offer a P2P service share fees during onboarding only through links to legal documentation, but all companies make fees clear during transaction processes.
- All of the companies provide accessible ways for users to reach customer service. The apps all provide multiple ways for users to contact customer support, including at least one real-time human support method. However, the companies should increase transparency around customer service request resolution timelines.
- Most companies advertise additional services within their apps. None of the apps require users to sign up for additional services when onboarding to the digital wallet or P2P service. But most of the apps do advertise those additional, fee-bearing services within the app experience, which amounts to upselling to a captive audience.
- All of the companies make users agree to unfair terms in order to use the services. Five of the six companies require that users agree to arbitration clauses and class-action waivers. The five do offer opt-out clauses, but most are onerous and require users to mail a physical letter within 30 days. All of the companies reserve the right to change their terms and conditions at any time, with varying commitments regarding user notification for changes. Some promise notice only when legally obligated or when the company deems it reasonable, while others commit to notify users of material changes.
- Apps do the basics to support users in managing and tracking their spending. While all of the digital wallets offer basic transaction tracking features, they miss critical opportunities to support their users’ financial health. To improve financial well-being, wallets should incorporate features such as automated savings tools (e.g., round-up savings and scheduled transfers to emergency funds), personalized spending insights that offer actionable advice based on user behavior (e.g., “Based on your spending, consider setting a dining-out budget”), and integrated debt management resources to help users track and pay down debt.
- All of the companies have additional opportunities to design their apps and products to support users’ financial well-being. CR reviewed digital wallets for components of financial well-being by design—such as default settings that could save users money and advance notification of recurring transactions—and found some features to be universal and some features to be absent.
- Apps do not accept, or do not promote that they accept, alternative documentation for identity verification. Within in-app flows to verify identity, few apps accept identification methods other than Social Security numbers, which creates a barrier to access for people without Social Security numbers.
- Not all of the apps and documentation are available in Spanish. Four of the six apps are available in Spanish. Only one also provides its legal documentation in Spanish.
We scored each digital wallet on the data collected and provide ratings for each Framework principle and subprinciple, as well as an Overall Score for each company. We present the ratings and scores in two tables in order to more directly compare similar services. The top table includes the ratings and scores for the companies’ wallet and pay functions; the second table includes the ratings and scores for the companies’ stored balance and P2P functions. Each company has areas where it excels and areas for improvement.
See the full report for CR’s ratings for each digital wallet evaluated.