Does Using Mobile Payments Keep You From Earning Rewards?

There are all kinds of myths about credit card rewards and credit scores, although many of them have been proven false over the years.

For example, it’s common for people to believe they won’t earn any credit card rewards if they pay off purchases before their billing statement closes, although this is not the case. There are also people who believe carrying a credit card balance actually helps their credit score more than being debt-free, although this rumor has been debunked numerous times.

It’s also commonly repeated that using digital wallets like Apple Pay and Google Pay means missing out on rewards, but this is a myth that once had a grain of truth to it. The fact is, in their infancy, digital wallets had some wrinkles to work out when it came to ensuring consumers earned the correct rewards for each purchase.

However, these have been largely resolved over the years. In most cases, consumers don’t need to worry that their digital wallet transactions won’t earn rewards.

How mobile credit card payments work

The most commonly used digital wallets include Apple Pay, Google Pay and Samsung Pay, but there are also store-specific mobile wallets like Walmart Pay and Amazon Pay.

In any case, digital wallets are mobile apps to make payments without having a physical credit card present. These applications use a process called “tokenization” to hide card numbers and other identifying information when transactions are made, thus boosting credit card safety and security in the process.

The mobile device itself may also have safety features that can make using the digital wallet more secure, such as fingerprint technology, face ID or codes to unlock the phone. This can make digital wallet purchases considerably safer, while also keeping customers from having to carry their cards or manually enter card numbers when making purchases.

Can you still earn rewards when using a digital wallet?

While digital wallets are used to make purchases, the actual transaction shows up on the credit card statement just as it would if the card itself had been used. From there, purchases are listed on statements based on the merchant category code (MCC) assigned for the transaction. These codes are typically assigned by the four major credit card networks (American Express, Discover, Mastercard and Visa) and are used to communicate the type of purchase being made.

Ultimately, MCCs are used to determine the rewards rate for different types of purchases. For example, a credit card that earns bonus rewards on travel purchases would earn those bonus points on a purchase that had a travel-related MCC, as determined by the credit card network.

That said, MCCs aren’t something most consumers need to study or check for. In most scenarios, credit card purchases will show up with the right code and earn the commensurate amount in rewards automatically, regardless of whether the purchase was made directly with a card in person or using a digital wallet.

When in doubt, check the fine print

It may be a good idea to read your credit card’s fine print on the use of digital wallets, in addition to confirming you’re earning the right amount in bonus rewards on your credit card statement. Regardless of improvements in technology, there may be times when the rewards rate doesn’t apply for some reason or a bonus offer you were expecting to receive isn’t applied correctly. Incorrect rewards amounts may also be caused by the MCC assigned to a purchase made through a digital wallet.

As an example, Discover says the following about earning rewards through its Cashback Match™ program:

“Purchases made through third-party payment accounts, mobile or wireless card readers, digital wallets or similar technology will not be eligible if the technology does not provide sufficient transaction details for rewards qualification.”

And as a counterpoint, American Express specifically says, “Yes, you receive the same rewards and benefits of your American Express Card when you use it with Apple Pay.”

Tips for making sure you don’t miss out on rewards

• Try it. The first couple of times using mobile pay can feel a bit strange. Start with a payment in a place where you feel comfortable and not rushed. Once you see how easy it is, you’ll get more comfortable depending on it.
• Add them all. To maximize your rewards, add all your credit cards to your mobile wallet. It doesn’t take long, and assures you’ll have all your cards with you. That way, you can choose the one that’ll earn the most rewards.
• Start small. If you’re wary of whether a local store will code a certain way, make a small test purchase before you use a mobile wallet for a large payment.
• Ask. It may feel like an odd question, but you never know. A manager has likely heard this question before.

Credit cards with bonuses for mobile payments

Once you dive into the fine print of various credit cards and offers, you’ll even find that some rewards credit cards give you more cash back for using a digital wallet as payment.

One popular example is the Apple Card*, which earns 3 percent cash back in Apple Pay credit card rewards with select merchants, 2 percent back on any purchase made with the Apple Card and Apple Pay and 1 percent cash back on all other purchases.

And the Capital One® Walmart Rewards® Card* earns 5 percent cash back at Walmart.com (including pickup and delivery), 2 percent back at Walmart stores and fuel centers and on travel and restaurants and 1 percent back on other purchases. In the meantime, cardholders can also earn 5 percent on in-store purchases made at Walmart when they pay with their card and Walmart Pay for the first 12 months.

In the past, the Chase Freedom Flex®* has offered bonus rewards for payments made with mobile wallets as part of its rotating quarterly categories. While there’s no guarantee it’ll return, it’s one of the best cards without an annual fee and worth considering for your regular wallet.

The bottom line

If you’re worried your credit card won’t earn the right amount in rewards if you pay with a digital wallet, you don’t have much to stress about. Chances are high that rewards will apply for each purchase you make, and you can always call your card issuer to discuss getting rewards you are due if that’s not the case.

There are other notable benefits digital wallets offer that can make using them worthwhile, including the extra layer of security they bring and the convenience of not having to carry around a physical card. When you combine the benefits of today’s best credit card offers with the security features and ease of use digital wallets provide, paying for purchases this way becomes a no-brainer.

*Information about the Apple Card, Capital One® Walmart Rewards® Card and Chase Freedom Flex® has been collected independently by Bankrate. Card details have not been reviewed or approved by the issuer.