In today’s wired world, buying a cup of coffee no longer requires pulling out your wallet. Instead, you can use your smartphone. Companies have developed a variety of approaches to mobile payments.
Smartphone owners in the U.S. bought $500 million worth of goods and services using mobile wallet apps in 2012. It’s predicted that number will explode to $35 billion by 2017.
Mobile apps like Square Wallet use your phone’s GPS to let a store know you've arrived. Tell the cashier your name, your picture pops up on their screen, and the money for your purchase is deducted from your bank account.
Venmo, a startup owned by PayPal, is another mobile payment app that’s gaining traction. Venmo, and competitors like Square Cash, let friends exchange cash via email.
Big-name companies like Visa and MasterCard are in the mobile payment space too. They each announced plans this week for new services that will allow customers to make purchases by tapping their phone to a store's card reader. The technology relies on a new feature in Google's Android operating system called Host Card Emulation, or HCE, which stores credit card data remotely, rather than on the phone itself.
With so many options to pay via mobile phone, consumers are left wondering if using their phones is as risky as using traditional credit cards.
A recent report by Kaspersky Labs says 99 percent of newly discovered malicious software in 2012 targeted Google’s Android platform. According to IDC, Android smartphones had a 78.6 percent market share in 2013.
But it isn’t just Android devices that are at risk. Earlier this year, Starbucks found itself in hot water when hackers discovered that data from its iOS users was being stored in clear text -- meaning it wasn’t encrypted for security.
The company quickly released a fix, and didn’t report any data stolen. Yet the incident was a reminder that hackers are actively targeting mobile devices.
“You know the attackers will always follow where the money is and where the consumers are. The consumers increasingly are moving onto Android devices and so we’re seeing 90 percent of the attacks happening on those devices,” Michael Lin, vice president of mobility at Symantec, told CBS News.
That said, Lin believes mobile payments are just as safe as credit cards -- if companies are smart about storing your data.