By Ken Colburn, Data Doctors
PHOENIX — Q: I’m a little nervous about all this talk about turning my smartphone into my wallet; isn’t it just going to create another major area to get breached?
A: This week’s unveiling of Apple’s new mobile payment initiative called Apple Pay has reignited the industries attempt to migrate from traditional credit cards to mobile payments via smartphones.
Without understanding the technical details of how mobile payment systems will work, it’s easy to understand the anxiety created when you think that your smartphone can be used to make purchases.
The most common concern is that anyone that gets a hold of your smartphone can start making purchases at will.
If you’re following basic smartphone security rules, you have a lock code to make it much more difficult for a stranger to use your phone.
If you think about it, if you lose your physical wallet, anyone can essentially make purchases until you contact your credit card company or bank to disable the cards.
The reality is that most of us carry numerous credit and debit cards, so the process for blocking thieves can be very time consuming.
With mobile payment systems, if you lose your phone, you can go to any internet connected terminal in the world and disable the mobile payment system in minutes.
It’s obvious that our current credit card system is gravely outdated and ripe for exploitation, which is why we continue to hear about major breaches almost weekly.
As long as merchants are storing credit card information, they will be major targets for hackers and that’s where mobile payment systems can help.
Both Google Wallet and the proposed Apple Pay service act as a proxy between your actual credit card account and a merchant’s payment interfaces.
In the case of Google Wallet, you fund your account with your bank, credit or debit accounts, so if a merchant you do business with gets compromised, you’re actual credit card accounts are never in danger.
Although Google is focusing on turning NFC (Near Field Communication) enabled phones into touchless payment devices, they also provide a no-fee physical Google Wallet card you can use anywhere MasterCard is accepted in the US.
If you bought anything from Home Depot during the suspected breach period (April to August) and used a traditional credit card or debit card, you need to monitor those accounts for fraudulent activity.
If you aren’t sure which card or cards you used during that 5 month period, it can be a bit of a chore.
You could have any card you think you might have used replaced, but that’s kind of a pain as well.
If you had used a Google Wallet card, all your accounts are safe; you just go online, disable the card and request a new one in minutes. Learn more here.
Apple Pay is initially focusing on the Touch ID fingerprint recognition combined with NFC in the new iPhone 6 & 6 Plus which generates a one-time use code that the merchant accepts as payment.
Once again, your credit card information is not shared with the merchant or stored anywhere (not even on your phone), so your exposure is dramatically reduced. Learn more here.
Mobile payment systems are far from perfected or more importantly widely supported just yet, but I encourage everyone to keep an open mind as they become available.
It really is so much better than what we’re doing today.