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Many experts believe that Apple Pay has revolutionized mobile payments. The service is rapidly gaining popularity in the United States, and European countries are eagerly awaiting the launch of the solution on their continent. The launch of the Apple Watch could also dramatically accelerate the adoption of mobile payment technology among consumers and merchants, as it allows customers to pay for purchases with a flick of the hand. However, security is the main driver behind mobile payment solutions and innovative services. The developers assure that payments from a smartphone are safer than credit cards, and users of mobile payment technologies can no longer worry about stolen accounts. Is it really?
According to the major analytical publication The Economist, smartphone-based payment systems are not perfect in terms of security. The weak point of any mobile payment system - Apple Pay or any other - is the registration point when the user connects his credit card to the system. As Apple explains, during the registration process, it collects some of the key characteristics of a user's account and their phone, such as their geographic coordinates. Apple transfers this information to the bank, which compares it with the information available to it. If the data matches, the card is added to the phone of its legal owner. But if, for example, the phone is located in Nigeria, and the user's home address is registered in one of the US states, the bank shows a red light and can request more information about the customer by calling him.
Once the card is registered on a specific phone, the risk of unauthorized use is significantly reduced. Mobile payment systems do not store the number printed on the card, but create a unique proxy for each individual device. This number is safely stored on your phone or in the cloud. The proxy cannot be used separately from the mobile payment system, and therefore becomes useless to criminals. Despite this, the number of merchants accepting payments from smartphones is still small compared to the number of credit card acceptance points. For example, in the US, 9 million retail outlets accept cards and only 700,000 accept Apple Pay.
In terms of cards, EMV (chips) technology can reduce, but not eliminate, credit card fraud. Unfortunately, the chips can be tampered with, as criminal organizations regularly prove. In contrast, mobile payments create a unique transaction for each purchase, thus preventing fraud. We can only hope that we will be able to observe an increase in the use of mobile payments and an increase in the security of users' finances due to this.
According to the major analytical publication The Economist, smartphone-based payment systems are not perfect in terms of security. The weak point of any mobile payment system - Apple Pay or any other - is the registration point when the user connects his credit card to the system. As Apple explains, during the registration process, it collects some of the key characteristics of a user's account and their phone, such as their geographic coordinates. Apple transfers this information to the bank, which compares it with the information available to it. If the data matches, the card is added to the phone of its legal owner. But if, for example, the phone is located in Nigeria, and the user's home address is registered in one of the US states, the bank shows a red light and can request more information about the customer by calling him.
Once the card is registered on a specific phone, the risk of unauthorized use is significantly reduced. Mobile payment systems do not store the number printed on the card, but create a unique proxy for each individual device. This number is safely stored on your phone or in the cloud. The proxy cannot be used separately from the mobile payment system, and therefore becomes useless to criminals. Despite this, the number of merchants accepting payments from smartphones is still small compared to the number of credit card acceptance points. For example, in the US, 9 million retail outlets accept cards and only 700,000 accept Apple Pay.
In terms of cards, EMV (chips) technology can reduce, but not eliminate, credit card fraud. Unfortunately, the chips can be tampered with, as criminal organizations regularly prove. In contrast, mobile payments create a unique transaction for each purchase, thus preventing fraud. We can only hope that we will be able to observe an increase in the use of mobile payments and an increase in the security of users' finances due to this.
