Security of mobile wallets all hype?

Every time the topic of mobile wallets comes up, an inevitable conversation always occurs regarding the security of the wallet and the risk of phone theft. What happens when you lose your phone? Doesn’t this put the customer at risk? Won’t we see an increase in fraud?

Now answer this question: How secure is your current wallet? What would happen and what would you do if you lost your wallet? Odds are that you don’t have a password to open your wallet, but I would bet that you do on your phone.

The fact is that placing payment on a device SIM or in the cloud, protected by passwords and encryption technology, is more secure then walking around with your wallet in your back pocket or in a purse.

We went through similar concerns of hysteria when credit cards with the Europay, MasterCard and Visa (EMV) chip were rolled out in Canada and Europe. I remember watching “journalists” create an atmosphere of fear that criminals could walk down the street with devices capable of stealing from unsuspecting people as they go about their day. This concern has never become a reality.

I am not arguing that we should not be concerned about the security implications of putting payment information onto a mobile device. What I am arguing for is a better comparison between having payment information on a phone and a physical wallet. If your wallet is stolen today, there is nothing stopping a criminal from making purchases immediately until you or your bank request that the account be shut down. Why would this not be the same of a mobile wallet?

It would be great if the financial services industry could focus more on creating innovative solutions, rather than imposing additional constraints and instilling fear into customers for problems that don’t exist.

What steps do you think the industry should make mobile wallets more secure? Join the discussion.