As the popularity of mobile phones expands, so too does their function. For some consumers, this means they can do more than simply text, make calls, send emails and surf the web.
Customers can literally skip the lengthy bank and checkout lines in favour of their smartphone when it's easier to check their online bank accounts, pay bills and even make purchases right from the palm of their hand.
But are they aware of the associated risks?
Be aware of how the service functions
Google Wallet, a virtual wallet that stores your payment card details for online and in-store purchases, was hacked this year – twice in two days to be exact. Since a small hack could cost a victim anywhere from few dollars to up to thousands, which they may not be reimbursed for, these attacks raise security concerns surrounding just how safe mobile payment methods are.
Mobile payment systems are still a relatively new service. From a legal perspective, many businesses involved in the process of digitally transferring funds via mobile devices are not banks. If they do not meet Australia's established definition of providing banking services, they may not be legally obliged to adhere to consumer protection laws or regulation.
Therefore, it's up to the consumer to read the particular mobile payment system's terms and conditions prior to using the service. Most mobile payment system vendors and processors voluntarily disclose their protection policies in their terms of service. And if they don't, there's a good chance some protection is in place since there are card member agreements linked to using the account.
Related: Protect yourself from identity theft
Mobile payment system safeguards
Although some may hold the opinion that mobile methods aren't safe, there are a few notable digital protections to consider. For one, there is a lot of data being processed during a mobile payment transaction that can help determine if it is a fraudulent or rightful transaction.
In-built mobile phone GPS locators provide a layer of protection by helping to prove legitimate or fraudulent activity. There's also the argument that smartphones can be locked with a pin passcode and are usually always in a person's line of sight, whereas a plastic card is kept unseen in your wallet or purse.
Related: iPhone 5: When and what to expect
Tips to pay it safe
- Never access your bank accounts or make payments on your mobile device while connected to public Wi-Fi, like the free Wi-Fi you might be able to access in cafes, hotels, or airports. Wireless connections are less secure than 3G mobile or hard wired counterparts and can expose your personal data to third parties. Use accounts from your home or office instead for banking purposes.
- Only use trusted websites while you're shopping online. To confirm on a desktop, check that there is a picture of a lock sitting in the URL address bar in your web browser. This indicates that the site is secure and encrypted. While smartphones don't display padlocks, one way to tell is by looking at the URL and ensuring it is 'https' not 'http'.
- Don't save your passwords on your smartphone. If you lose it, crooks have the power to log in to your bank account and empty it.
- Download and install the Find My iPhone app if you use an iPhone or iPad. This app by Apple allows you to locate your phone via GPS and/or wipe the contents of your phone using your internet account, should you lose it.
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