The advent of mobile payments apps have made it easier than ever to complete transactions, send money to friends and family, and process payments in a flash. But how secure is it to carry your money on your phone?
Today, you no longer have to pull out your wallet to buy a cup of coffee or give money to another person. Instead, all you need is your smart phone. Mobile payments are rapidly growing in popularity and expected to take over credit card payments in the next decade. However, the question remains, are they secure? The answer is yes, if you understand the technology behind mobile payment apps and the attached security concerns.
There are few things you should keep in mind when using your phone to handle your transactions.
Here’s how it works
Keeping your money on your phone may feel less secure than cash or credit cards just by virtue of the fact that it makes money so abstract. Coming from an era in which money was concrete and tangible, something you could hold in your hands, may make you feel less confident in the security of your mobile wallet.
But actually, there are so many security measures in place that your mobile wallet is a more secure alternative for you to keep your money safe.
Google Wallet is expected to be one of the major competitors in mobile payment apps. To use Wallet, all you have to do is hold your mobile device up to a sensor at the checkout and funds are automatically withdrawn from your account. So, you speed through the checkout process faster than today’s already archaic method of using a debit or credit card. This is similar to how Apple Pay works, minus the thumb print ID scanner on the phone to verify identity as an added layer of security.
You can make purchases with Google Wallet in the Google Play Store and several other websites. Just look for the “Buy with Google” button. You get instant notifications after making a transaction. Additionally, you can store gift cards and loyalty rewards cards in the Google Wallet app. Of course, Google Wallet currently has limited support because it requires an NFC chip—unavailable on many smartphones—which enables the sensor to transmit information at a checkout.
Google Wallet isn’t just for making purchases at stores, either. You can also use it to transfer money to friends and family. For instance, if you go out to eat with a group of friends, one person can pay the bill and have everyone else instantly reimburse them through Google Wallet. Nobody needs cash, and nobody skips out on the bill.
When you process a transaction using your smartphone, a series of encryptions, relays and decryptions takes place that the traditional bank-to-processor transaction model just can’t hold a candle to.
When you make purchases using your debit or credit card, your account information becomes vulnerable for the amount of time it takes to process the transaction. But when you exchange money on a mobile platform or app, your account information is never made vulnerable.
Another major contender in mobile payment apps is Square Wallet. Square was originally a company that enabled iPhone and iPad users to accept credit card payments through an add-on device used to swipe said cards. Now, Square Wallet uses your phone’s GPS to let a store know you’re there, so you can make a purchase. All you have to do is turn on your phone’s GPS and tell the cashier your name at checkout. The cashier can then click your picture on the store’s device to charge you for your purchases. You never even have to pull out your phone or wallet.
Square Wallet is different from Google Wallet, because it relies on a phone’s GPS instead of NFC technology or Host Card Emulation (HEC) technology. However, Square has also encrypts payment and personal information. Stores are becoming advocates for Square Wallet, too, because it cuts down on credit card processing fees, which increases their profits.
Your mobile platforms are the safest place for your money
Contrary to our instincts, carrying your money around with you on your person is far less secure than keeping your money secure via an online or mobile platform.
Your money is significantly more vulnerable to theft in a physical form. If your cash is stolen, that’s just gone forever. If your cards are stolen, sure you can put a hold on them — but only after you realize they’ve been stolen, and even then you get to deal with your bank’s policies and procedures to recover any funds that may have been used in the meantime.
When your money lives online and on encrypted mobile platforms, you have multiple security measures in place to keep your money safe.