Electronic, card and mobile payments have become an essential part of modern society. But as this became the new normal in the payment world, one glaring issue has arisen - payment security.
The security of how we pay our friends, family, or businesses when we purchase something is often taken for granted. However, security is still very much a concern.
Mobile payments using platforms such as Samsung or Apple Pay have grown in popularity over the past decade. Even still, a lot of people are hesitant to use their smartphones to pay.
A study back in 2018, found that credit cards and cash were still leading the way when it came to payments. Only 9% of people were using Apple Pay and 7% using Venmo.
This did eventually change during the pandemic when in-store mobile payments grew by 29% in the U.S. in 2020.
With more people using digital payments than ever, fraudsters are always on the lookout for new ways to steal your data and cash. But this also means that payment platforms are trying to improve the technology that keeps your money safe.
Payment security systems
With more and more digital wallets and mobile payment processors on the market, it’s hard to keep up as security technology evolves.
Generally, mobile cash apps are accessible in a similar way you would use a physical bank card, with a PIN to unlock your phone, and then another PIN or fingerprint to unlock your cash app. However, the way that payment processors protect the transactions themselves can vary.
Here are some of the most commonly used ones on the market right now:
Apple’s Secure Element
One of the most popular digital wallets, Apple Pay, uses something called a ‘Secure Element.’ This is a specialized computer chip embedded in your iPhone.
What this chip does is store virtual account information, rather than your physical card number or PIN. When you make a payment, it sets up a digital ‘token’ which is a code to authorize the payment to a card reader. This offers a few layers of defense.
Host Card Emulation
Perhaps Apple’s biggest rival, Google Pay, uses a similar system they call ‘Host Card Emulation.’ This works by generating a token online, rather than just on your phone.
These digital tokens used are all unique and encrypted so that payments are unlikely to be redirected by fraudsters.
Google Pay also allows a limited number of tokens to be kept on your device, which allows you to still make some payments if you’re not connected to the internet. This does leave a small vulnerability if your smartphone is ever stolen, however.
Blockchain is an increasingly popular method to protect payment processing. Many of the big firms and banks are already using blockchain-inspired systems to help make their transactions safer and more efficient.
At a basic level, blockchain is a shared and secure digital ledger. It allows each ‘block’ within a transaction to be tracked and approved by everyone involved in that transaction.
This creates a digital paper trail that’s hard to refute. It’s a more transparent way of processing payments, and therefore reduces the potential for any fraudulent activity.
It’s much harder to manipulate data that's as transparent as this, and so in most cases, fraudsters won’t even try.
Why Figure Pay is safer
Figure Pay, a new deposit and payment account from Figure, is a safer option than many alternative payment processors because of its use of Blockchain.
With this increasingly popular method of managing transactions and data, Figure Pay has been quick to adopt it. Figure Pay has been designed with Blockchain at its core.
Unlike many other banks or payment processors, it hasn’t had to adapt its system around Blockchain. Rather, it has been built with Blockchain in mind to improve safety.
What safety concerns surround traditional mobile payments?
Traditional mobile payments are a fast and convenient way to pay for purchased items. However, they are not a perfect solution, and there are some safety concerns to know about.
Some of the safety concerns are around the system itself, but most are to do with user behavior.
The top safety concerns with mobile payments are:
Mobile phones now have a huge amount of data about their users, so they are increasingly a target for fraudsters. Phishing attacks generally involve SMS texts, emails, or phone calls that ask you to click on links or give personal information to fraudsters.
For example, you may get a phone call from someone posing to be from a payment provider. A lot of people won’t think twice and will supply information like Social Security Number, date of birth, or even passwords for your digital wallet. Fraudsters can then use that information to log into your account and steal from you.
2. Installation of malware
One of the biggest threats to mobile payments and digital wallets is the installation of rogue applications or malware. Fraudsters can find ways to install malware on your mobile device, often through phishing attempts.
They can then potentially access your digital wallet and make payments without your consent.
3. Lost mobile device
If you lose your mobile device or if it’s stolen, people can try to find a way to access it. They may try to bypass any PINs or fingerprint locks you have. But if you don’t have your phone locked, they can simply try to access your payment apps.
The more sophisticated fraudsters will be able to jailbreak the device’s operating system and gain root access to steal data on the device.
4. Fake apps
Another source of threat for mobile payment systems is if fraudsters manage to get you to download a fake app.
For example, they may send a phishing email pretending to be from a payment provider with a link to download the “new app.” Once downloaded, you attempt to log into it and the fake app collects whatever data you’ve put into it. They can then use that login information on the real app and gain access to your digital wallet.
The best way to avoid these security issues is to be aware of them to begin with. A lot of people still fall for phishing scams so you should always try to be vigilant and suspicious of emails, texts or calls from banks or payment providers.
How Blockchain makes it safer to pay by mobile
The good thing about Blockchain is that it makes the whole payment process much more transparent. With essentially nowhere to hide, fraudsters will think twice about trying to gain access to your funds or digital wallet.
That means that any payment provider who utilizes Blockchain within its system is automatically going to be a safer bet than a traditional mobile payment system.
If you’re looking for an extra safe, Blockchain-powered mobile payment system, Figure Pay is for you. Figure Pay was built with safety, security, and transparency in mind to ensure that all users can securely make payments.