The Wall Street Journal reports on security and privacy risks that can be connected with mobile banking:
“Digital wallets” that let consumers pay with the swipe of a smartphone could make the plastic credit card obsolete. But the technology also could chip away at consumers’ privacy—and tempt them to spend more than they otherwise would.
Using a technology known as “near-field communications,” or NFC, consumers will be able to buy items simply by passing their phones in front of a sensor at the checkout counter. Though NFC isn’t available in many phones yet, a number of companies, including Google Inc., are close to rolling out programs. […]
By 2014, 70% of U.S. consumers will have smartphones and 52% of those will be NFC-capable, according to estimates by payment consultancy Mercator Advisory Group. […]
The problem, some critics say, is that the ability of merchants, coupon services and others to extract more information about where people shop and what they purchase amounts to an invasion of privacy. […]
Google is launching its NFC-based Google Wallet this summer with MasterCard Inc., First Data Corp. and Citigroup Inc. The mobile service will be compatible with MasterCard’s PayPass contactless payment system, which is already in place in more than 124,000 stores.
Google also is working with 16 retailers, including American Eagle Outfitters Inc., Walgreen Co., Macy’s and Subway, to develop its own point-of-sale service, called SingleTap. Under this system, consumers will be able to pay with credit accounts stored on the phone, redeem promotions and earn loyalty points.
Google says it plans to require users to opt into any service that would use or store their purchase data—although the current version of Google Wallet doesn’t allow data to be stored. Industry observers say practices among other companies handling the data likely won’t be consistent, at least in NFC’s early stages.