Protect Your Mobile Money

Jeffrey Coleman, an information systems architect from Silver Spring, Maryland, has mixed feelings about digital wallets, apps that store credit card data so you can make payments with a click of your phone. Google Wallet can be used to pay for items at more than 140,000 retailers, but the 39-year-old Coleman has been hesitant to use it. “I’m concerned that if my phone gets lost and someone accesses my account, my information could be compromised,” he says.

The mobile payments industry is expected to reach $214 billion by 2015, up substantially from the $16 billion reached in 2010, according to research firm Aite Group. Digital wallets make shopping easier and less time consuming. “With digital wallets, your phone stores secure payment information linked to a credit card or prepaid debit card as well as gift and loyalty rewards cards,” says Andrew Kameka, managing editor of Androinica.com, a mobile products website. “If I go to a store and buy something, all I have to do is put my phone against the register and the funds are automatically deducted.”

Though interest in digital wallets is growing, no company has yet cornered the market. Google Wallet works at merchants that accept MasterCard PayPass phones and on certain Sprint Nextel or T-Mobile phones.  Another effort, called Isis, is being jointly developed by AT&T Mobility, T-Mobile USA, and Verizon Wireless. Visa, MasterCard, American Express, Discover, Chase, Capital One, and Barclaycard have all announced support for Isis, which is being test-marketed in Salt Lake City and Austin, Texas. In May, Visa and MasterCard each unveiled new digital wallet platforms: Visa’s V.me and MasterCard’s PayPass Wallet Services.

For the growing number of consumers who pay for items using a digital wallet, security concerns are likely to be top of mind. “Banks have put a lot of effort into designing mobile apps that are secure,” says Kevin Mahaffey, chief technology officer and co-founder of Lookout Mobile Security. However, it’s prudent to take additional steps to protect your financial information.

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When making transactions:

Beware of spoofed invoices. A spoofed invoice looks legitimate but isn’t. Google Wallet warns customers on its website to avoid merchants that request payments through wire transfer or direct bank transfer. It also tells consumers to beware of sites that seek to break up high-priced transactions into smaller payments or disburse amounts to several recipients.

Double-check Web links. Don’t fall prey to “phishing” attacks in which you enter personal information on fake websites. Before you log in, make sure you’re on the right URL. Also, log on to sites directly, rather than clicking on links in e-mails. Finally, avoid providing personal information such as your Social Security number via e-mail or online forms.

When using your phone:

Set a passcode. “Put an auto-lock on your device and set your screen to lock after five minutes,” Mahaffey says. Sixty-two percent of smartphone users don’t use a password on their home screen, probably contributing to the fact that smartphone users are 33% more likely than the general public to be victims of identity fraud, according to a study by Javelin Strategy & Research.

Use mobile security. Two apps, Find My iPhone and Where’s My Droid, allow you to lock your phone remotely and wipe out information if it is lost or stolen. Programs such as Lookout Mobile Security’s Lookout app keep your phone protected from malware and spyware in addition to providing remote data removal and cell phone tracking.

Update software. If there’s a security flaw on a banking app, the bank will generally release a software update to fix it. Download all updates as soon as you’re notified.