A Guide to Mobile Payments – Security and Fraud Prevention

By HLundgaard (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
By HLundgaard (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
With the recent news of credit card fraud, the mobile phone industry has made a big push to get behind mobile payment. Mobile payment has been touted as a way to reduce credit card fraud because the cashier doesn’t have access to a physical card that would contain an individual’s name, credit card number or security code.

If you are thinking about beginning to get in to the mobile payment system, but still concerned about security and fraud, here’s what you need to know.

The two major smartphone platforms, Apple (Apple Pay) and Google (Google Wallet) have implemented their solutions in order to address credit card fraud. Apples system launched in 2014 while Google’s launched in 2011. Following are the details of how each addresses security and fraud.

Apple Pay implementation of mobile payment security is to combine near-field communications (NFC) technology for payment processing and the iPhone Touch ID fingerprint reader or passcode for security. Your bank payment network creates a unique device account number specifically tied to the phone and to the credit card added. In the event of theft or a lost phone, you can place your phone in lost mode to suspend Apple Pay transaction. Apple Pay is reactivated once you unlock your phone with your pin code.

Google Wallet implementation of mobile payments also uses NFC technology for payment processing but instead of a fingerprint reader like the Apple Pay’s implementation, you use a PIN that only you know. Google stores your credit card information on its server and transmit the encrypted data using secure socket layer technology. Google Wallet Fraud Protection covers 100 percent of all transactions. In the event of theft or a lost phone, you can go to the Google Wallet website and remotely disable your phone.

Both Apple and Google offer similarities in how they address credit card fraud. They both use NFC which means that the phone and the receiver have to be very close to each other in order to begin the financial process transaction. They also implement security on the phone through the use of either fingerprint reader and/or passcodes. Both companies utilize tokenization which allows the credit card number to be unique and transaction specific. With the mobile payment industry expected to account for up to 50 percent of all U. S. digital commerce by 2017, these companies are aggressively promoting their platform as a way to provide consumer confidence in mobile payments as a measure in increasing security and preventing fraud.

Author: Terrence Wolfork (+Terrence Wolfork,@trwolfork )

This post was published on the Military Families Learning Network blog on April 30, 2015.

Creative Commons License This work is licensed under a Creative Commons Attribution 3.0 Unported License.

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