Debit cards have long been used as a more convenient way for purchasing goods and services. Just as debit cards replaced checks and cash as the easiest way to pay for items, another method of payment has gained considerable popularity in recent years. Mobile payments, or digital wallets, have become more common, with many consumers choosing to use them in part due to ease of access. Since most digital wallets can be used from a smartphone, many consumers find it much easier to use than plastic cards from a wallet or purse. But not every consumer thinks that way. The main concern for those who don’t use mobile payments is that of security, with 46% of them saying in a recent survey that they worried digital wallet security wasn’t sufficient. With so much discussion centering around security, a comparison of mobile payments to debit cards shows which is the most viable for consumers, combining the best of convenience with security.
Mobile payment applications are relatively new, but there are plenty of options to choose from. The most popular by far is PayPal, with 79% of consumers who use digital wallets using the service. Google Wallet comes in second at 40%, while Groupon, Apple Passbook, Pay Pass by MasterCard, and Dwolla follow. As more and more people use mobile payments, companies have introduced a number of security features to address many of the main concerns, but some of the security strengths of digital wallets aren’t of the technical variety. Since mobile payment applications are found on smartphones, people tend to have them on their person at almost every moment. Unlike wallets or purse contents, people will often notice when their phone is not with them or if it has been stolen almost immediately. Debit cards can get misplaced or lost, and often people won’t notice until hours or even days after the fact. Early detection of theft can save consumers a lot of headaches if it is reported quickly.
On the more technical side of things, digital wallets have security features that can be considered superior to those of debit cards. With mobile payment apps on phones, the GPS feature can act as another safeguard, determining where a payment is being made, who the consumer is, and whether the payment is considered legitimate. If a transaction is thought to be suspicious, an alert can be sent to the company and to the consumer. Many digital wallets can also generate one time use account numbers automatically. This can prevent payment card fraud while also preventing others from tracking what each consumer buys. Digital wallets can also include encryption, which scrambles the information surrounding a transaction and can only be unscrambled with the right algorithm once it reaches its intended destination. This means if the account is hacked, the hacker won’t be able to read the data.
Another strength for digital wallets includes the ability of consumers to add more security features to the application. Consumers may include a PIN for the phone itself, creating another wall hackers would have to crack. Another helpful addition can be immediate electronic receipts. Consumers who use mobile payments can ask for receipts to be delivered to their email immediately after a transaction is completed. They may also choose to get a text message alerting them to a recent payment. In this way, consumers will be alerted to a payment if they weren’t the ones conducting it.
Debit cards have security features as well, but their weaknesses are notable. For one, the features have already been around for decades, giving hackers more time to find ways around them. Magnetic stripes, for example, are common and very vulnerable to cyber attacks and card skimming schemes. There are new security measures that have been introduced in Europe, such as chip and PIN cards, but they have yet to make their way overseas to the U.S., giving hackers a clear region of the globe to target when it comes to debit card fraud.
Security on mobile devices isn’t just a personal issue; it’s a business issue too. With so many companies now adopting bring your own device policies, a device that becomes compromised can end up adversely affecting a business. Because of this, people who use digital wallets should know about the security features used and the potential consequences of getting hacked. When compared to debit cards, mobile payments can be just as convenient and more secure, but a hacked debit card may only affect the consumer’s bank account, while a hacked device can affect much more. As long as consumers are aware of the benefits and tradeoffs, they’ll be able to make an educated decision that offers the most protection.
