We hear much about mobile banking and mobile payments these days, but what if it all goes wrong? How secure are these services and can you really trust a phone to manage your bank account?
These are the questions we should ask before we start using our mobile devices to make payments and yet most of us already are using our smartphones to pay for things.
Do you use iTunes while on the move? Then you are making payments through your telephone using your credit or debit card with Apple. Do you have the Amazon app on your phone? You make payments using oneclick. PayPal and other services are almost all now pervasive on the telephone too and yet we still have this issue about using our bank account on a telephone app.
Why? Because we think it is insecure. What if I lose my phone? What if someone finds out my PIN or password on the phone? What if my phone is stolen?
These are all valid concerns, of course, but many are not relevant or valid. Mobile banking on a telephone is the same as mobile banking on the internet in most cases. You need to have a valid username, password, PIN and access codes.
In some ways, the mobile phone is actually more secure than internet banking. For example, banks can check that it is really the customer at the ATM by checking they have their mobile with them. This began with banks using text messaging to check it is you and, more recently, banks actually checking that it is your telephone through the mobile network automatically, if you allow them.
In some ways, the mobile phone is actually more secure than internet banking
Equally, as we saw with the launch of the iPhone 5S, the telephone is now a biometric tool. Banks can use fingerprint authentication, built into Apple’s new operating system, as an anti-fraud device and some banks already are.
In fact, some are going one step further and using the camera on a telephone to check it is really you by using iris recognition. This is where you hold the telephone over your eye and the app checks that it is your eye. This is used by Bank Intesa in Spain for their high-net-worth clients, but these sorts of biometric and additional layers of security are more than capable of being delivered to all bank-users if they want additional security on their mobile.
So where is the real issue with mobile fraud and security? It may well be with you. You may worry about someone accessing your telephone or stealing it. If that happened, is your telephone secured by you? Have you placed a lock code, or checked tracker apps or your security on the telephone? Do you make sure your mobile is secure from viruses and malware?
This last point is probably the most critical. Many mobile users happily download apps and access links from Facebook or Twitter, but can you ensure that it avoids accessing a fraudulent link or download?
Just as you load anti-virus software on your PC or laptop, you need to do the same with your smartphone and, if you do not, you really are exposed to insecurities on your mobile, not the bank or the banks’ apps.
Meanwhile, to put mobile fraud in context, according to CyberSource’s 2013 UK Fraud Report, most online retailers and companies are seeing no difference in mobile fraud rates compared to general internet fraud. In fact, 36 per cent of merchants think that mobile fraud is lower than internet fraud.
Chris Skinner, chairman of the Financial Services Club and chief executive of Balatro, blogs at the Finanser.