Management
2016-04-01
Introduction
This paper is devoted to the usage of mobile wallets, their advantages and possible problems. The number of users with smartphones grows from year to year. In this case, mobile wallets have quickly become popular technology. Nowadays, more than twelve percentages of users with smartphones make mobile payments.
There are several main players in the mobile wallets arena. They are PayPal, Apple Pay, Goggle Wallet, Android Pay and Samsung Pay (Voo, 2013). There are some applications, which are available for both platforms (for example, Square Wallet). As a rule, retailers’ merchants and payment providers cannot track the buying process. It should be noted that all card details are only available to the user and the bank that issued his card (Top Ten Reviews, 2016). The rest of the participants in the transaction know only a unique customer number in the system of mobile payments.
Despite the convenience and simplicity in usage the mobile payments, there are enough problems in this industry. The most important risks in this area are that mobile devices are more susceptible to loss and theft, mobile devices are more personal and potential hacker can get a lot information about the user (information on a bank card, passwords, others). Thus, the main thesis is that security issues prevent widespread use of the mobile wallet technology.
Discussion
Mobile Wallet Applications
The mobile payments are based on the usage the near field communication technology, when allows a high speed data exchange between devices located at a distance of 10 centimeters or less from each other (Comviva, 2015).
At the same time, some applications allow to pay for products at participating businesses without ever having to pull out wallets or phones. For example, Square Wallet Application allows paying just via user’s name and picture (Wise, 2013). All the user needs is only his name. When his name is entered, there is his picture and name pops up at the special register. When the cashier taps the picture, the customer is automatically charged. Such application can be easy to hack.
The Federal Trade Commission of the US noted that low-cost or no-cost mobile technologies can have hidden costs and risks. For example, retailers, advertisers, application developers and other market players can use the information collected from mobile devices. It provides them the possibility to build more comprehensive consumer profiles. In this case, the personal life of a customer and confidentiality of his transactions may be threatened. At the same time, customers, who pay via prepaid accounts, cannot rely on the federal protections, which are afforded to the bank plastic cards and limit the client’s liability in the case of fraud.
Types of Mobile Fraud
The total amount of the global fraud loss in the telecommunication industry is more than $46 billion (Sachin, 2015) or two percentages of total revenues. The huge part of this loss falls on Indian market.
There are six main types of mobile fraud. They are as follows:
phishing,
access to wallet through the fake SIM SWAP,
commission fraud by agents,
cyber-attack,
fake Know Your Customer service
application manipulations by authorized users (Sachin, 2015).
Around seventeen millions of Indians use different mobile money platforms, which are offered by banks (Sachin, 2015). On the one hand, it can be a sign of the economic development and significant growth in India. On the other hand, it provides wide opportunities for fraud and hacker attacks in this country. Regular monitoring of controls may be critical in maintaining the risk mitigation strategy for mobile money service providers in India. Thus, the growth of mobile wallet industry entails new trends in fraudulent activity.
Security Issues of Mobile Wallets Industry
The chief investigative officer of Forensics, Andrew Hoog, said: More of client’s information and purchasing habits will become known and able to be marketed. The ordinal customer has only to be comfortable with it” (Smith, 2011). It allows supposing that the number of fraud will increase due to the bigger openness of mobile wallets services and applications.
Typical fraud starts as a hack of a credit card data from a big company (Home Depot, Target) (Pogue, 2015). Another type of attack is malware. For example, the attacker publishes a malware disguised as a legitimate in the app store or on any site. The user downloads a virus on his smartphone, which can contain a large amount of sensitive data. The virus tries to take control of the smartphone resources, collecting data. As a result, the device redirects to malicious sites or uses paid services without the user’s knowledge. This model of threats makes to consider a smartphone from three perspectives:
the level of application: social networking clients, e-mail, SMS and data exchange tools for synchronization;
communication level: the mobile network, Wi-Fi, Bluetooth, micro USB ports and a MicroSD slot; malware can spread through any of these channels;
resource level: flash memory, camera, microphone and sensors of the smartphone; given that smartphones can contain sensitive data, the virus tries to take control of its resources, and to manipulate the data coming from them.
Such an attack can be considered as a closed loop, starting with the launch of the malware, passing through the application, communication and resource levels, then through the “short” numbers or malicious sites can return to the attacker.
Also the possible drawback of the mobile wallet can be a single pin, which unlocks all of the accounts stored in this wallet (Pegueros, 2012, 16). In this case, each customer, if he wants to prevent his phone and his money from fraud, should follow several rules. The main of them are to keep strong passwords, to keep security application in own phone, do not open attachments or upload applications from unknown sources, avoid using public Wi-Fi (Bhansin, 2016). As we can see, there are many limitations related to security issues in the mobile wallet industry. In this case, mobile wallet industry will face a serious matter: to increase transaction security without prejudice to the functionality and battery capacity of the smartphone.
Conclusion
In conclusion one can say that more and more people will use smartphones and make mobile payments. On the one hand, it can be a great step forward in the modern business world. On the other hand, mobile wallet services have enough security issues and may contribute to the spread of cyber crime. As Graylin (chief executive officer of LoopPay) said: “There is no perfect system, it will be always a game of cat and mouse” (ThreatMetrix, 2015). In this case, mobile wallet industry faces a serious obstacle to its further growth.
References
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Top Ten Reviews,. (2016). The Best Mobile Wallets of 2016. Top Ten Reviews. TopTenREVIEWS. Retrieved 31 March 2016, from http://mobile-wallets-review.toptenreviews.com/
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