Contactless payments: are phone pay apps safe to use?

Smartphone payment apps are becoming more common, but how safe are they?

Contactless payments: are phone pay apps safe to use?

Smartphone payment apps are becoming more common, but how safe are they? When it comes to your financial security, it pays to be in the know.

When new technology arrives, we weigh up the conveniences, risks and – perhaps most importantly – the cost, before we adopt them. Smartphone payments are the latest technology offered by banks to increase customer convenience.

This follows on from contactless card payments, which have grown rapidly since they were introduced in Australia: two thirds of Australians now possess a contactless capable card, up from only 8 per cent in 2010.

Smartphone payment apps use Near Field Communication (NFC) technology to make payments – the same technology that is used by contactless cards. Because the payment methods use the same technology, smartphone payments are already accepted by a lot of merchants in Australia.

Smartphone apps, such as Apple Pay and Android Pay, allow you to register your credit card and then activate your smartphone’s NFC chip to make a payment in-store.

The risks of using a smartphone pay app may seem larger than that of physical credit cards but the opposite may in fact be true.

With contactless payments now common on most credit and debit cards, anyone who finds your wallet could use your cards for contactless payments as long as they don’t spend more than $100 in a single transaction. If the same were to happen with your smartphone, this person would have to unlock your smartphone before being able to access an app. Following this first wall of security, they would then also have to access the app to make a card payment, which would require another code or even a fingerprint, which would be nearly impossible to do.

While the security risks involved seem quite minimal there is a financial risk that you may want to keep in mind if you choose to start using contactless or smartphone payments. MasterCard performed a study on adopters of their contactless PayPass cards back in 2012, which found account-holders “…spent almost 30 per cent more on average, using their PayPass-enabled card”.

Do you use contactless or smartphone payments? Will you consider them in the future?



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    2nd Aug 2016
    Banks are just like the government of the day....they never give you anything unless they can make manyfold back.

    2nd Aug 2016
    With all the crap and crime which is going down these days when it comes to money it is best to trust VERY LITTLE in IT, SOB, FBI, ASIO, RBA, WTF, and ESPECIALLY LNP and PM!
    3rd Aug 2016
    No not on my phone. It is bad enough that you cannot switch of the contactless option on your card. I do not need another one on my phone. Always request a receipt as well and check my statements for discrepancies. It has happened before and treat your cards as money. Keep them in a metal container in your pocket.

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