Brits Fret Over Potential ‘Mobile Wallet’ Hacks

Despite all the talk about the increasing adoption of NFC contactless payment systems, Britons remain sceptical about the potential security risks.

Both Google and Paypal have previously said they expect mobile payments to take off as an increasing numbers of mobile phones are sold with built-in NFC (near-field communication) technology.

NFC Uptake?

Indeed, Google executive chairman Eric Schmidt recently said that he expects that a third of checkout terminals in retail stores and restaurants will be upgraded to allow NFC mobile payments from mobile phones within the next year.

In August ABI Research reported that NFC providers and smartphones are stimulating the contactless payments market. It forecast that 85 percent of point-of-sale terminals that ship worldwide in 2016 will be “contactless-enabled”, or capable of supporting cards or NFC-equipped smartphones that let shoppers touch-in or tap their smartphones to make purchase.

Google has already launched a trial version of its Google Wallet app in the United States in May, that utilises NFC technology. The UK launch is expected next year.

But new research from consumer research company Intersperience has cast doubts on this supposed golden future for mobile payment systems, after revealing significant concerns from users.

Consumer Concerns

Intersperience found that most consumers are concerned about the security implications of using mobile wallets, with phone hacking fears a major concern. This was evidenced when the research found that 44 percent worry about lack of security software on mobile phones, and only 17 percent of consumers want to use mobiles as wallets in future.

These phone hacking fears, if true, could likely hamper the adoption among UK users of this new ‘swipe-and-pay’ smartphone system.

Intersperience’s Digital Selves project apparently sought the views of more than 1,000 British consumers. It revealed the lack of knowledge that some users have regarding NFC and mobile wallets.

24 percent of respondents said that using a mobile phone for payment “feels less secure but I don’t know why”, while a further 24 percent believe their mobile is more likely to be stolen than their wallet.

“There is no doubt that the phone hacking scandals have unnerved consumers,” said Paul Hudson, CEO of Intersperience. “We also detected a marked rise in security concerns when people use devices with mobile internet access compared to fixed access via PCs. These beliefs will impact the pace at which UK consumers adopt mobile payment systems.”

The research also revealed that just 8 percent of Brits currently use their mobile phone for payment although this is expected to increase as 21 percent said they would like to use their phone to buy something in future.

Unsecured Links?

“There is a common but not necessarily logical perception that as your internet link becomes ‘untethered’ your information is automatically less secure,” said Hudson. “The belief stems from the context of mobile usage which is generally when you are on the move in public places, although in reality there are far higher instances of security breaches over PCs than mobiles.”

The younger generation emerged as the keenest future fans of mobile commerce as one in three (33 percent) said they would like to use their mobiles to buy in future. Under 18s are also keener on mobile wallets or payment systems, with 25 percent happy to use one instead of a traditional payment method.

It is worth noting that there are also other security concerns about the use of mobile phones espicially after researchers in December 2010 demonstrated how they could intercept any GSM call, in as little as 20 seconds. Meanwhile in January 2010 researchers cracked the 768-bit RSA encryption, used for protecting sensitive data in transit.

Other concerns relate to flaws that could turn the mobile phone into a listening device that could literally bug its owners (i.e. listen in on their conversation).