The mobile phone has the potential to offer a much more secure payment experience than bank-issued plastic cards, says the Atlanta Fed in a myth-busting blog post.
- penned by Cindy Merritt, assistant director of the Fed's Retail Payments Risk Forum - notes that security functionalities resident in the mobile handset provide authentication capabilities that don't exist in the current payments environment.
"The ability to add passwords and GPS location functionality to the handset represent additional security controls to accessing payment instruments in the future mobile wallet," she writes. "Today, there are no locks on your leather wallet to preclude a bad actor from stealing your credit and debit cards and using them for illicit activity."
With the US still in thrall to mag-stripe only cards, Merritt says that the technologies that protect current payment modes in the US are becoming increasingly obsolete and vulnerable to fraud.
"Card payments grow riskier every day as the United States remains reliant upon mag-stripe technology, which is very easy for criminals to breach and then use to clone cards for illegal payments," she states. "Because mobile devices will use contactless technology in the form of an embedded computer chip, the mobile phone will be a much more secure payment device than the plastic cards we use today."
The blog comes amid a flurry of activity in the mobile payments space, with bank card schemes, tech companies, handset manufacturers and Silicon Valley start-ups each lining up plans to trial NFC at the point-of-sale.
The Atlanta Fed has formed a mobile payments industry workgroup in conjunction with its counterpart in Boston, which late last month published a paper outlining the "foundational components" for a mass-market shift to m-payments in the US.