Paying with your Mobile – is it the Future?

Hold on to your hats — cash and credit cards will be nullified in the next eight years. Well, that’s according to a survey of 1000 tech experts. About 65% believed that by 2020 we’d all be paying for our food, groceries, clothes and gadgets by swiping our mobile phones, instead of pulling out our wallets.

Crazy, right? Well, it might not be as mad as you think. MasterCard is already touting one of the first near field communication (NFC) systems for mobiles, PayPass, along with several other providers.

How does it work?
PayPass and other NFC systems work fairly simply. If you have a phone approved by MasterCard for PayPass use, all you have to do to pay is wave your phone within 1.5in of the PayPass reader, installed in the shop. There’s an NFC microchip installed in both your phone and the reader, and they basically transmit information between each other with a simple swipe.

The chip in your NFC device mimics a contactless payment card, so you just start your PayPass app, hold the phone to the reader, and you quickly and simply pay for your goods. That is, as long as it’s under £10. Due to security measures, you do still have to put in a pin or signature if your bits and bobs come to over a tenner.

Where can I use it?
Currently, MasterCard has rolled the payment system out to over 350,000 locations (mainly in the US), which include McDonalds, CVS, Walgreens and Macy’s, and is now shipping it out to the rest of the world — though in Japan mobile payment’s already become the norm. In the UK, you can already use it at many of restaurants and cafes, including Cafe Nero, Pret a Manger, Yo Sushi and Subway.

Is it safe?
There are two main arguments for the safety of PayPass and other NFC payments. On one hand, paying by swiping your mobile means there is no contact involved. This means cloning bank details and cards would be impossible using existing cloning technology that requires physical contact in order to read the details. Also, as payments without a PIN are limited to £10, if the phone was lost or stolen, it would take a while for any identity thieves to rack up a large bill.

However, on the other hand, there are several issues with NFC payment. You have to be sure that your payment details are adequately encrypted when passing from the phone to the reader. Also, that your information is only sent from your payment app straight to the reader, not through a third party app, where fraudsters can get to it. Also, never, ever store your payment information on a cloud — only on your phone where it’s safest.

Of course, technology is constantly developing, which means so are the fraudsters’ tools. For someone like me who still gets nervous using IVR technology and saying their payment details over the phone, the idea of someone being able to read my card details off my mobile is worrying.

Although companies advocating NFC payments are partnering up to increase security (which worked for IVR partners also), I think NFC payments are still exceptionally young, and security issues haven’t completely been ironed out. I think I’ll be biding my time over the next few years to see where NFC payment devices lead. Who knows — maybe by 2020 I’ll have changed my mind, along with the rest of the population.

By James Duval, IT specialist and technology geek extraordinaire. Image by: Tom Purves

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