If you’ve paid attention to other shoppers in line around you, there’s a good chance that you’ve seen someone pay at the register by sliding his cell phone across the card reader and PIN pad. This technology, known as a mobile wallet in the industry, is using the smartphone’s technology to virtually transfer money from the phone owner’s “wallet account” to the store’s account, has gotten both support and criticism from those in the technology and privacy sectors.
Right off the bat, using your phone to control all of your financial info might leave more than a few consumers breaking out in a cold sweat. But with the mobile wallet’s ability to pay both at the register and on websites and the estimated 60% of Americans using those mobile devices in some way, supporters have said it’s just as safe and as common as carrying a wallet. After all, most of us would rather find ourselves out of physical reach of our wallets than out of reach of our phones!
One real-world criticism of the concept involves the need to still carry a physical wallet for all of your government-issued ID, your health insurance cards, your checkbook, and more. If you have to have the wallet anyway, why risk the technological vulnerability of having all of your financial information available via a smartphone’s connectivity?
Apart from that hassle, critics are obviously very concerned about privacy and hacking. If all of your funds are accessible through your smartphone and therefore your cellular service provider, there may be an increased risk of being locked out of your device by a thief who hacks the cellular company, not just a thief who can hack into the banking system.
Of course, proponents of the technology have highlighted the very real levels of convenience that this concept allows. It’s not just a matter of swiping your phone and getting out of the store that much faster. Many of the service providers offer the option to deposit checks through the smartphone and mobile wallet. Users literally take a photograph of the front and back of the check using their mobile wallet’s app, then the money is deposited electronically in the user’s account. This will mean a great deal to users who do not live within convenient distances of their financial institutions, and will also allow consumers greater choice in whom they choose to bank with since they will not be held strictly to geographical options. Surprisingly, early reports on the fraud associated with this type of check depositing have said that only about 20% of the banks that even offer this technology have uncovered fraud of any amount.
As with all new technology, there will be bumps in the road, of course, but the reality is that even older technology has its weaknesses where hackers and fraud are concerned. No matter how you choose to do your banking and conduct financial transactions, it’s imperative that you monitor your credit reports, your bank and credit card statements, and any other documentation that concerns your identity.