Pitfalls of mobile payment

Imagine you’re shopping the aisles of your local supermarket and you pass a guy using his mobile phone. A common sight, right? But this time he’s stolen your credit card—electronically.

It seems that one guy—a security expert and not a thief, thank goodness—has developed an app that lets him wave his phone over a wallet in someone’s back pocket and steal credit card information. Then he just taps his phone at another cash register to charge whatever he wants.

Just as bad are thieves setting up accounts in the name of retailers and taking charges directly from customers.

It’s a nightmarish situation for retailers. But electronic theft and fraud could account for 1.5% of the $1.3 trillion that consumers may charge on their phones over the next several years, according to recent research by Juniper Research.

An article in this week’s Bloomberg Businessweek highlighted what could be a devastating problem for retailers and the fledgling mobile payment industry. Reportedly, only 12 percent of consumers have used mobile payments but companies like Google and Paypal, anticipating wider usage over the next several years, are pumping a lot of resources into finding ways to combat fraud by finding ways to authenticate transactions.

Eventually, mobile payments are likely to be safer than credit card transactions, according to some observers. Until then, it’s a brave new world for computer-savvy thieves.

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