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White Paper

Five Security Concerns with Mobile Payment Systems

March 10, 2015
James Michael Stewart


Mobile payment systems have solid promise to become the dominant means of financial transactions, but there are some hurdles to overcome. Apple Pay might be the dominant force today, but Google Wallet and others are not far behind. The year 2014 was when digital and mobile payment systems became known to a wide range of the general population, while only techno-enthusiasts were aware of the options in the four to five years prior. Thus, mobile payment systems are not new, but customers and merchants are quickly adopting them now that they have become popular. It still remains your responsibility to thoroughly research any mobile payment option before implementing it. It is your money and you have the burden of ensuring that it has the best protection possible.


With the popular adoption of Apple Pay, mobile payment systems have finally started to become commonplace. Although numerous mobile payment schemes have existed for years, only a few devices and limited number of retailers ever supported them. Now that many more consumers are interested in using mobile payments, it is important to evaluate just how secure or reliable such payment schemes are. Before you link your finances to a mobile device in order to make impulse purchases, there are five primary issues you need to consider.

Linking Your Finances to Mobile Payment Systems

Most mobile payment systems require that you link one or more of your existing financial accounts to the mobile payment system. They might require your credit card, debit card, ATM card, or even a direct link to your checking account. This linking allows the mobile payment system to apply the charges for purchases immediately to your existing financial account. Obviously this makes purchases convenient, but is that really the best move for you financially?

If a mobile payment system is able to place charges onto your accounts immediately, you should have a few concerns:

- If a fraudulent charge occurs, how difficult is it to get the charge canceled?

- If a fraudulent charge occurs and money is taken from my account, how hard is it to get my money back?

- If a duplicate charge occurs, what is required to get the duplicate charge(s) removed?

- Can I set a maximum per-charge ceiling? Or a ceiling for charges on a daily, weekly, or monthly basis?

- Does the mobile payment system have a per-charge transaction confirmation?

- Will the ease and convenience of mobile payments cause me to impulse spend? Can my finances handle that?

- If I decide to stop using the mobile payment system, how challenging is it to divorce my financial account from the payment system?

You need to investigate any mobile payment system prior to joining to obtain answers to these questions. If you are not satisfied with those answers, then don't use that mobile payment system.

There are some mobile payment systems that do not link directly to your existing financial accounts; instead you deposit money into them, similar to a gift card. These types of payment systems are less likely to cause significant harm to your finances in the event of a security breach, especially if you only deposit a small amount of money into the account, which you can handle losing if things go wrong.

My caution here may seem overblown in light of the proclamations from various mobile payment system vendors who claim they have the best security. It is important to realize that not all mobile payment systems are using the same security, thus they cannot all be the best at securing your financial and personal information. Over the last four or five years, numerous mobile payment systems have been compromised or shown to have weaknesses. Some of these breaches only revealed the users' names and contact information, while a few have revealed credit card and bank account numbers. When selecting a mobile payment system, be sure to review several options and look for information about recent hacks and updates. Just because a system was hacked in 2012, does not necessarily mean it has the same weaknesses today. But it is your responsibility to make sound decisions when it comes to your finances. Don't be uninformed. To find out about recent concerns, perform a few Internet searches using the phrase "mobile payment" along with one of the following: attacks, hacks, exploits, vulnerabilities, weaknesses, updates, security, or patches.

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