Confused by all the digital ways to pay that have sprung up in recent years? Here's how to make sense of the variety of new options.

Mobile Wallets

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What do they do? Let you pay for purchases at physical retail stores and online.
Noteworthy brands: Android Pay, Apple Pay, PayPal, Samsung Pay.
Setup: Register your credit, debit, or (in some cases) prepaid cards with your phone’s mobile wallet. Those card accounts fund the wallet transactions.
How it works: Hold the phone up to a merchant’s payment card reader and follow any instructions on it and your phone. Pay for online purchases by clicking the onscreen wallet button at checkout in a mobile app and increasingly on a website.
Cost: No direct fees.
What we like: Apple Pay is now accepted at 3 million stores in the U.S. because retailers are equipped with new EMV chip card readers that also have near field communication (NFC) technology. Android Pay and Apple Pay need NFC to transact with cash registers. Samsung Pay can be used at more than 10 million U.S. merchants, because it employs NFC plus a second technology that lets it communicate via magnetic strip with readers that don’t have functioning NFC. Mobile wallets add extra security by transmitting an encrypted “token.”
Caveats: PayPal is mostly for online shopping and has very limited acceptance at retail stores. Apple Pay works only on certain more recent iPhones; Samsung Pay works only on certain Samsung devices. You can’t pay with a wallet if your phone runs out of power.


Person-to-Person (P2P) Payments

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What do they do? Let you send money to another person via the app, email, or text.
Noteworthy brands: BBVA/Dwolla, Chase QuickPay, ClearXchange, Facebook Payments in Messenger, Popmoney, Snapcash, Square Cash, and Venmo.
Setup: Non-bank P2P: Download a P2P app, create an account, and digitally link it to your bank account or a credit, debit, or prepaid card. Bank P2P: Sign up for your bank’s online or mobile banking app, enroll in the optional P2P feature, and link your email address or mobile phone number to the service.
How it works: Senders must enter the dollar amount and the recipient’s contact information. Recipients get a notification when someone sends them money, with instructions on how to retrieve it.
Cost: Usually recipients never pay, and fees for sending vary from free to up to 3 percent or more if paid for with a credit card or some debit cards.
What we like: It’s super-easy. Can transfer money fast (but see caveats). All the services take steps to ensure security.
Caveats: How quickly recipients get their money varies, depending on the service. For example, money moves instantly via Facebook Payments in Messenger and by ClearXchange, but your bank may take up to five business days to make the funds available to you. Venmo also moves money in an instant, but it will take the recipient another day before the funds move from Venmo to a bank account.


Branded Payment Apps

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What do they do? Let you pay for purchases only at the merchant brand’s physical stores and service providers, and their online counterparts.
Noteworthy brands: Dunkin’ Donuts, Lyft, PayByPhone, Starbucks, Uber, Walmart Pay.
Setup: Download the brand’s proprietary smartphone app, create an account, and enter the credit, debit, or—if accepted—prepaid card or PayPal account that you want to fund payments.
How it works: Payment procedures vary: Your smartphone screen may display a QR code or bar code read by a device at the checkout, your phone may read a QR code on a merchant’s payment card reader, users may enter a location number found on compatible parking meters, or you may simply click an onscreen payment button.
Cost: Generally no direct fees.
What we like: These apps combine payment, loyalty programs, and ordering capabilities. Uber automatically charges you for your ride. PayByPhone lets you extend parking meter minutes from wherever you are. Walmart Pay can be set up to scan electronic Walmart receipts, compare advertised local competitors’ prices, and credit the difference.
Caveats: Can be used for only one merchant brand. You can’t pay if your phone runs out of power. The Lyft app may hold onto more than the cost of your ride for several days, which in turn could cause an overdraft if it is funded with a debit card. Some PayByPhone locations charge a fee of 25 cents to $1.


Electronic Toll Tags

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What do they do? Let you pay for highway, express lane, bridge, and tunnel tolls, as well as parking at some airports.
Noteworthy brands: ExpressToll, E-ZPass, FasTrak, Good To Go, MnPass, SunPass, TxTag.
Setup: Purchase a tag, which is a transponder or sticker with an embedded microchip, and affix it to your car. Create an account online, register the tag’s ID number, and link a credit or debit card to the account to fund it manually, periodically, or automatically when the prepaid balance drops below a certain level.
How it works: Instead of using the cash toll booths, simply drive through the designated toll lanes with readers, which let you pay without stopping. In some states, high occupancy vehicle carpoolers can flip a switch on the tag to use tolled express lanes free.
Cost: Beyond the toll itself, tolling authorities charge a small or no monthly account maintenance fee, depending on location.*
What we like: Commuters can knock 20 minutes to an hour off their daily drive, says J.J. Eden, president of the Alliance for Toll Interoperability. No stopping. No need to scramble for cash or change. Some agencies offer electronic toll discounts of 10 to 25 percent or more. Unlike most tags, usable in only one state, E-ZPass works in 16 Eastern and Midwest states. But toll agencies are working to make tags usable on any other system.
Caveats: High traffic volume can clog up even the toll tag lanes. And now the discounts, used to lure new customers, are starting to go away.

Editor's Note: This article also appeared in the November 2016 issue of Consumer Reports magazine.

*This article was updated on October 13, 2016, to correct an error in the description of fees associated with electronic toll tags. Beyond the toll itself, tolling authorities charge a small or no monthly account maintenance fee for the tags, depending on location, rather than the "no fees" originally reported.