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How secure are mobile payments?

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.

Hackers will always follow the money

Mobile payment apps—like anything technological—are susceptible to hackers. Just look at the news about recent credit card leaks at Target and Home Depot, to name two out of many easily-found examples. That means your personal information—especially your bank account—is at risk. Mobile payment apps use the same type of encryption as payment processors on the Internet. So, the security risks are similar. Each mobile payment app has its own safety concerns, so the built-in security of each one needs to be analyzed to determine if your money and personal information is safe.

Currently, there are several mobile payment companies with apps, like LevelIUp, Paydiant, Leaf, and Roam Data. However, but they’ve been slow to take off in the market because stores need special software and hardware to accept mobile payments. Luckily, this delay has given app developers and device manufacturers—like Apple and Google—more time to enhance security features for mobile users. Hundreds of stores have already gotten on board and more join each day.

Is the Google Wallet app 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To use Wallet, all you have to do is hold your mobile device up to a sensor at the checkout and funds are automatically withdrawn from your account.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.

Google Wallet is one of the safest mobile payment apps because of its built-in security features. Heavy AES and 128 to 256 bit encryption and information residing on Google’s secure servers in secure locations keeps all of your information protected. Wallet also comes with 24/7 fraud protection and monitoring. If you lose your phone, you can login to your Google Wallet account on any browser to instantly disable your lost or stolen device. You also have to enter a PIN to use Google Wallet, as you would with a debit card. On top of all this, you’re also protected by Google’s privacy policy.

Is the Square Wallet app safe?

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.

Is PayPal’s mobile payment app safe?

PayPal has been the leader in online payment processing for over a decade. Now, the company is competing in the mobile payment market. With PayPal’s app, you can make transactions by entering your mobile phone number (or email) at the checkout and then entering a PIN. PayPal’s mobile payment app has grown fast because it doesn’t require stores to purchase card readers or other hardware. Instead, the app implements software that connects people to PayPal’s encrypted servers. Major retailers—such as Home Depot (likely fueled by a recent breach in its systems)—are now adopting it.

PayPal’s mobile payment app is secure because you’re required to enter a PIN every time you want to make a purchase. The app links to your PayPal account where you can manage all of your bank accounts.

What else is on the way?

Visa and MasterCard are also working on their own mobile payment apps where users would simply need to tap their phones on a store’s card reader to make a payment. These apps rely on HCE technology, which is currently only available on a few Android phones. Other mobile payment app competitors include Venmo and LevelUp.

So, are mobile payment apps safe and secure? Let’s put it this way. It depends on which one you choose and how well you protect your accounts and passwords. The second you think any connected technology is safe and secure, it usually isn’t. Hackers these days are extremely astute, incredibly skilled, and can usually find a loophole. Security on these apps is getting better every day with fingerprint IDs, bar scanners, encryption, PIN codes, eye scanners, and constantly changing passwords, but the good guys must always be vigilant to protect your information. All mobile payment apps have vulnerabilities, but so do online payment processors, and even that trusted credit card in your wallet. Rest assured that those who create such apps are working diligently to manage as many risk factors as they can. For the most part, app creators have mitigated the risks and planned contingencies. So, with that said, feel free shop away and have a happy Cyber Monday!