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Security of mobile wallets all hype?

Every time the topic of mobile wallets comes up, an inevitable conversation always occurs regarding the security of the wallet and the risk of phone theft. What happens when you lose your phone? Doesn’t this put the customer at risk? Won’t we see an increase in fraud?

Now answer this question: How secure is your current wallet? What would happen and what would you do if you lost your wallet? Odds are that you don’t have a password to open your wallet, but I would bet that you do on your phone.

The fact is that placing payment on a device SIM or in the cloud, protected by passwords and encryption technology, is more secure then walking around with your wallet in your back pocket or in a purse.

We went through similar concerns of hysteria when credit cards with the Europay, MasterCard and Visa (EMV) chip were rolled out in Canada and Europe. I remember watching “journalists” create an atmosphere of fear that criminals could walk down the street with devices capable of stealing from unsuspecting people as they go about their day. This concern has never become a reality.

I am not arguing that we should not be concerned about the security implications of putting payment information onto a mobile device. What I am arguing for is a better comparison between having payment information on a phone and a physical wallet. If your wallet is stolen today, there is nothing stopping a criminal from making purchases immediately until you or your bank request that the account be shut down. Why would this not be the same of a mobile wallet?

It would be great if the financial services industry could focus more on creating innovative solutions, rather than imposing additional constraints and instilling fear into customers for problems that don’t exist.

What steps do you think the industry should make mobile wallets more secure? Join the discussion.

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Comments: (2)

Eric Smith
Eric Smith - Dynamic Partners - London 07 June, 2013, 08:30Be the first to give this comment the thumbs up 0 likes

Michael,

I think your point is well made. For sure the industry can do more, but in many ways mobile wallets are a step forward from a physical wallet or purse.

In reading this though, the thing that struck me was your phrase "there is nothing stopping a criminal from making purchases immediately".

Now why is that? Simply because for CNP transactions - you only need details easily found on the card.

So whether it's a physical or mobile wallet - the real issue here is how easy it is to do transactions with nothing more than card details.

There needs to be more done to authenticate the person performing the transaction as being the actual owner of the wallet or card. The technology and ability is there - it simply needs to be used.

 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 07 June, 2013, 16:51Be the first to give this comment the thumbs up 0 likes

You can have your mobile wallet and lose it too:

The Clear And Present Danger With NFC Payments

There's no such risk with a physical wallet.

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