Consumer, Consumer Threat Notices

Before Wallet 2.0 Hits the Streets, Security Needs to be in Place

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By on Aug 04, 2014

The purse dates back hundreds of years. Made from leather and originally worn around the waist, the purse was the go-to place to store coins and trinkets. But then the paper bill, with its lightweight and clear denominations, came along and changed everything. People no longer needed to carry purses, or purses as heavy, because there were decidedly fewer coins to be concerned about. That gave birth to the wallet as we know it.

But the wallet as we know it may not be around much longer. We now have devices (about the same size as a wallet, actually) that can store, transfer and manage money with just a few taps. Yes, our smartphones are slowly, but surely, replacing wallets as our portable money-management systems.

But what will that digital wallet look like? Derek Walter, of PCWorld, gave a brief glimpse into the phone-wallet of the future by comparing two competing versions: Google Wallet and Amazon Wallet.

Both wallets carry quite similar features: both use Near Field Communication (NFC)—a short-range wireless signal allowing you to simply wave your phone to process fees; both store gift and loyalty cards from various outlets; and both condense all of these features into one nice little smartphone app.

But these features mean little if those accounts aren’t secured. Thankfully, both software giants allow you to use a personal identification number (PIN) to access the wallet (in Google’s case), or to use certain cards within the wallet (in Amazon’s case). There are, of course, various degrees of encryption in place to make sure your information is transmitted safely. But largely, the end-user must rely on a PIN to secure their precious financial information.

That’s a good start, but it may not be enough. The problem lies in the fact that our smartphones are used for nearly everything. They can act as a set of keys for both our homes and cars, thanks to the advent of the Internet of Things. They can also take photos, send and receive emails, play games, update Facebook, fetch the news, play music, play movies, find restaurants, post reminders of birthdays, notify you of meetings and, of course, make phone calls. That makes the smartphone an incredibly convenient, and lucrative, target for thieves and hackers.

So say your phone (wallet) is lost or stolen. How, then, do you make sure your information and finances are protected? You could remotely wipe it using an app like McAfee Mobile Security (free for both Android and iOS) from your computer or a friend’s mobile phone. But how will you be sure your information is safe in those moments after losing your phone but before deactivating it? Having a password in place is a good way of preserving your phone’s security for a time, but it could be compromised—or dodged entirely—with enough time and know-how.

Another dangerous scenario is the possibility that other apps may find a way to access the financial data stored on your phone. Hackers may think to create apps built specifically to access that data—and where there’s a will, there’s usually a way. Malicious software is already a problem on mobile phones—will mobile payments make malware even worse?

These questions will need to be answered before end-users like you and I can safely use our smartphones as wallets. That may take some time. So, for now, the oldest forms of transporting money—the wallet and the purse—will have to remain.

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