More and more Mobile Payment Applications such as Apple Pay & Android Pay are being introduced and used in our everyday shopping experiences. Rather than paying online, these applications allow you to use your phone like a credit card at the shopping centre, meaning you don’t even have to carry around your wallet anymore! But how do they work and how safe are they? We have everything you need to know about these new Mobile Payment Apps.
To be able to compare this new system to credit cards, we will quickly outline how credit cards work. We all know that in the shops credit cards work by pay passing or inserting/swiping the card then entering a pin but a lot more happens whilst we do this. Your credit card number and some other information on the card gets sent to an acquirer (a bank that processes card transactions) who checks with your credit card company for authorisation and approve the purchase, all happening in about 1 second!
Now let’s look at the new Mobile Payment Apps! These new applications uses a type of wireless communication called Near Field Communication (NFC) rather than the magnet strip or chip on your credit card. The NFC only works within a few centimetres and your phone has a chips in it just for this. This means that you can only use this method of payment at terminals that also have an NFC chip.
Although this method sounds quite unsafe and makes you even more worried about losing your phone, it is actually quite safe. When you make a transaction, you don’t transmit your credit card number so this can not be stolen. Every purchase is assigned a different number (a token) so even if someone stole this number they couldn’t use it again as it can only be used the one time. The phone also ensures that a pin is entered, or fingerprint scanned, to proceed with payment. This means that even if someone had your phone, they would also need your pin or finger which is quite unlikely!
From what has been researched so far, these applications do like quite safe so the days of only taking your phone, license and keys when you leave the house could be just around the corner! Just remember that these new Mobile Payment Applications are still relatively new to the market so we recommend not leaving your wallet at home just yet, in case the shops you use don’t have this feature yet.