Your smart phone is about to get smarter as mobile payment apps replace swiping plastic, by enabling you to tap your phone and exchange your credit card information via a radio frequency field. But just how safe is this?
I first learned about mobile payment apps in a college personal finance class. My professor warned us to be careful about using these apps until laws catch up with technology. Let me explain.
Once upon a time
the government enacted laws to protect consumers using credit cards. For example, did you know that by law you are not liable for any fraudulent transactions if you report your credit card missing before the card is charged? Or that you are only liable for $50 if the card is used before you report it? Before these laws were on the books, each credit card company had their own rules and some followed regulations imposed by the industry itself.
Which is where we are now with mobile payment technology. There is no standard for how mobile payment app companies should handle fraudulent transactions. Each offers their own policy on protection for fraudulent or disputed charges. Notice that the existing credit card law has no reference to mobile payments even though you’ll still be using a credit card via your cell to pay.
Another reason to stay away from mobile payments is that, like credit cards, it desensitizes us from our cash. Mobile overspending will be just as easy as when using plastic because the whole transaction is disconnected from our money – or lack thereof.
A third problem arises when your mobile phone gets lost, stolen, or hacked into. While many of the companies pushing mobile payment apps are reassuring customers they use the latest technology to encrypt their information, take precaution by knowing beforehand what you are liable for in case your phone gets into the wrong hands. If you think you’ve been the victim of identity theft, act fast to avoid major damage to your accounts.
What other safety issues are you worried about? Or are you looking forward to putting your credit cards away and using your phone to pay instead? If you’ve used a mobile payment app, what has been your experience?