MTE Explains: What You Should Know About Making Mobile Payments

The tech industry is excited by the prospect of using smartphones to pay for everything, but as we’ve gone about our everyday lives, most of us hardly consider pulling out anything other than our wallets when we get to the front of the line in a store. Yet as more businesses and financial institutions take the steps they need to inject mobile payments into our day-to-day lives, the time will eventually come to familiarize ourselves with the concept and prepare to make the transition responsibly. Here’s what you should know.

Making a mobile payment refers to the numerous ways you can use your smartphone or mobile device to send money to another person or company. Sometimes this means using your handset to initiate an electronic transfer. Other times, this means using your device in place of a credit card.

Apple Pay is currently making headlines with its promise of letting users pay at cash registers using their iPhones. The Google Wallet app has offered this functionality on Android phones using near field communication for years, but it has yet to make significant inroads. CurrentC is a retailer-backed alternative to both that is hardly a household name. PayPal doesn’t let you pay using NFC, but it lets you transfer money to friends and businesses alike. The company also offers an app called Venmo that you can use to send money to people you know. Which players will be able to stand the test of time remains to be seen.

Transferring money is surprisingly easy on mobile devices. With apps like PayPal and Google Wallet, the process consists of simply knowing a person’s email address and entering it into the app. The latter even lets you send money using Gmail.

As for replacing your credit card, that’s more complicated. First, your phone must have an NFC chip (there’s a good chance it already does if it was purchased within the last couple of years). Then you go to a store that has an NFC-based pay terminal for you to tap your phone against.

MobilePayments-NFC

Your phone may prompt you to enter a passcode or apply your fingerprint, depending on the app. The transaction is then validated by your device’s secure element, which may be stored locally (as is the case with iPhones) or, using Host Card Emulation, in the cloud (which applies to some, but not all, Android devices). The process may seem like magic, but it’s not all that different from swiping a credit or debit card. Both exchange money electronically. It’s just a matter of choosing which way you wish to initiate the process.

MobilePayments-Apple-Pay-Passbook

So that’s what mobile payments are and how they work. Here’s some basic advice to adhere to as you go about spending money.

1. Lock Your Phone/Apps

Let’s get the obvious out of the way first. You should lock your phone. Considering it automatically contains access to your contacts, email, social networks, photos, and who knows what else, this should be a no-brainer. But if you are going to add your financial information to the mix, please, oh please, make sure your phone is protected behind a passcode (whether that’s a PIN, password, or gesture) and make sure that it is a secure one.

You can also take it a step further. Some apps give you the option to require a passcode to open them. Pick a PIN that’s different from the one you use to unlock your phone.

MobilePayments-Google-Wallet

2. Do Not Use Public Wi-Fi

Try to avoid public Wi-Fi networks. Thieves can monitor what goes across them, picking up IP addresses and snooping on what you’re doing. Chances are someone doing this is on the lookout for financial data, and you don’t want to do anything that would hand this information over to them. Your best bet is to wait until you’re on a secure, encrypted Wi-Fi network before initiating any financial transactions. And if you’re going to a website, make sure you’re using HTTPS. This information is too private to trust to plain old, non-encrypted HTTP.

3. Consider Installing A Security App

Apps such as AMC Security promise to help you keep your payments safe by being on the lookout for copycat apps that might attempt to steal your data. You can install software like this for extra peace of mind, but as long as you’re careful about the apps you use and the links you click, doing so isn’t necessary.

Only the future knows if the majority of us will start using our mobile devices as regularly as cards and cash in the future, but tech and financial companies are moving ahead with the assumption that we will. You don’t have to make the transition anytime soon, but if you’re going to give it a shot, be responsible.

In an age of big data breaches, there’s only so much you can do to make sure your information never gets stolen (thanks to thieves stealing information directly from the companies we do business with), so don’t let fear stop you from embracing mobile payments. Act responsibly, and maybe soon you will be able to leave the bulk of the cards in your wallet at home.