What makes digital wallets safer than physical ones?

Setting up most digital wallets requires you to have authentication enabled for your device. On an iPhone, for example, you must have a lock screen passcode enabled before setting up Apple Pay. This is mandatory, as is confirming every transaction with the same security you use for your lock screen. Using Face ID or Touch ID is even more convenient, with your passcode only acting as a fallback in most cases.

Even the Apple Watch, which lacks a biometric sensor for authentication, must have its own PIN configured to use Apple Pay. Once you put it on your wrist and enter your PIN, it's ready for Apple Pay until you take it off, after which the passcode is required again. Unless your passcode is incredibly weak, the risk of someone using your cards without you knowing is nearly zero. That's in comparison to most regular cards, which often don't require any authentication for small purchases.

Digital wallets also greatly reduce the chance of you falling victim to card skimmers (malicious devices that steal your card details by attaching to legitimate scanners), since you don't have to insert a card. Fake touchpoints for digital payments are a possible threat, but aren't common in practice.

Importantly, digital wallets use tokenization. This means payments don't use your actual card number; the wallet instead stores a unique number for that card, so the merchant never sees your card's real details. Each transaction happens through a one-time code that's useless for anything else if it's stolen. This combination makes it very unlikely that your digital cards could ever be used by someone else.

Another vital feature is being able to take action if you lose your phone or it falls into the wrong hands. Services like Google's Find Hub or Apple's Find My help you find your lost device (even when it's off, in some cases) and can wipe your digital wallet data if needed. This only disables the digital copies of the cards on your phone, so you won't have to waste time calling your bank to cancel your cards and waiting on new ones.