With17% of US adults using mobile payment apps for in-store purchases, payment apps are pretty popular, especially with younger generations. As we enter a more digital age and move ever closer to becoming a cashless society, using payment apps for everyday purchases will undoubtedly become the norm.
In preparation for this, the Consumer Financial Protection Bureau (CFPB)recently introduced new regulations to protect consumers and prevent fraud when using payment apps. While these new rules are a welcome sight for consumers, they also highlight the potential security risks of payment apps. Discover how safe payment apps are and how to protect yourself against some of the most common mobile payment security risks.
Firstly, what is a mobile payment app?
Payment apps allow users to make contactless payments by simply hovering their smart device over a payment terminal. Users can also use payment apps to send and receive money from friends and family.
Some popular payment apps include Apple Pay, Google Pay, Samsung Pay, Venmo, and PayPal. These apps can be downloaded on any smart device, including phones, watches, and tablets.
Most payment apps feature a digital wallet that allows you to store debit and credit cards as well as airplane boarding passes, train tickets, gift cards, and more.
How safe are payment apps?
Mobile payment apps are generally very safe to use, thanks to the range of built-in security features. That said, safety and security features can differ from app to app, and similar to banking apps and other financial systems, scams are still possible. This is why it’s vital to conduct your own research before choosing a preferred payment app.
Trusted payment apps usually have robust encryption protocols alongside multifactor authentication (MFA). They will also regularly conduct security audits and release updates to protect users against the latest security threats.
Mobile payment security threats and challenges
So, while payment apps are generally safe to use, they are not exempt from the threats of scammers and hackers. Additionally, several challenges come with using payment apps, with some of the most common risks including:
Phishing attacks
Phishing attacks are a form of social engineering scam in which scammers try to manipulate victims into sharing sensitive information by impersonating trusted officials such as bank representatives. Hackers will often contact victims via email, text, or phone to exploit their trust and acquire personal information, such as financial details.
Using public Wi-Fi
Public Wi-Fi networks are often open and unencrypted, meaning anyone can access them. Because of this, using public Wi-Fi when sending or receiving money via payment apps makes it much easier for hackers to intercept and steal your data.
Losing your device
53% of Americans use digital wallets more than traditional payment methods, and mobile apps are quickly replacing physical wallets. As a result, if you lose your device or if it is stolen, you risk compromising your financial data if your payment apps aren’t secured with pins or strong passwords.
A lack of insurance
Unlike funds in your bank account, money stored in some payment apps might not be insured by the Federal Deposit Insurance Corporation (FDIC). As a result, if the app company goes out of business, your funds might not be protected.
Tips for finding the most secure mobile payment app
Mobile payment security standards can vary from app to app, making evaluating each one's security and safety features essential. To help you find the most secure payment app, make sure it comes equipped with:
Tokenization
Official payment apps feature tokenization, a technology that generates a series of random numbers (known as a token) and replaces your card number when making contactless payments.
Tokenization provides an extra layer of security should the data become compromised. For example, if a hacker or cybercriminal intercepts a transaction, they will only be able to see a randomly generated token instead of your card details. Tokens are unique for each transaction, providing extra security and peace of mind.
Encryption
Encrypted data refers to randomly generated code, enabling you to make secure mobile payments wherever you are. Any trusted payment app should feature encryption as it is a vital security measure against threats like hackers and cybercriminals.
Two-factor authentication
Official apps should always feature two-factor authentication (2FA). This involves using two forms of identification, such as a password and a biometric factor, like facial recognition, to log in.
How to use payment apps safely
With security features such as these, payment apps are generally very safe to use. That said, mobile payment apps are never 100% secure due to the potential threat from hackers, scammers, and cybercriminals. Discover how to protect yourself from scams and security threats when using payment apps:
- Be cautious when sending money: Fraudsters often impersonate trusted companies and individuals to convince you to send them money. Always verify the person or business you’re sending money to is legitimate by verifying their identity.
- Ensure payment apps are up-to-date: Regular updates provide the latest security patches and features, so you should ensure your payment apps are up-to-date.
- Monitor your accounts: Regularly check your accounts for suspicious activity. If you spot any unauthorized transactions, contact your bank immediately.
- Set up Find My Phone: This feature allows you to track and locate your phone if it is lost or stolen.
- Avoid public Wi-Fi: Avoid using open and unsecured networks when making transactions.
- Enable 2FA: Using two forms of identification every time you log in provides you with an additional layer of security and makes it less likely for hackers to access your financial data.
- Avoid app-only business transactions: If a business insists on receiving payment via app only, this could be a scam. Credible businesses usually offer you more than one payment option.
- Move funds into a federally insured account: Rather than storing funds on payment apps, transfer them into federally insured bank accounts to keep your money secure.
Stay secure with the First Merchants mobile app
With state-of-the-art security features and advanced controls to protect your finances, the FMB Banking app allows you to manage your accounts securely – anytime, anywhere. Available for individuals and businesses, bank securely and conveniently with the First Merchants mobile app.
