cellphone payments 'huge risk'
19 May 2008

London - "Contactless" payments made via cellphones pose the greatest future threat to the security of consumers' financial details, a leading security expert says. Around 52m consumers will adopt new mobile technologies to pay for everyday goods and services by 2011, according to a recent study by analysts at Juniper Research.

It expects mobile payments to hit £5.9bn (R92bn) in the next three years, as phones become an increasingly viable alternative to cash, credit and debit cards. But Greg Day, an analyst at security specialist McAfee, believes the technology will yield immense opportunity for data fraudsters.

"It makes me quite nervous. It's to this type of contactless small payments arena that smart data criminals will turn: if they just take a fiver from everyone, rather than larger sums from fewer people, they'll still make a fortune.

"Little and often, instead of one big heist, will be their mantra."

Day believes that "tap and go" mobile phone payments - many of which will use short range, wireless technology called "near field communication" (NFC) to transmit data from the customer's mobile phone to the retailer's card reader - will go further to revolutionise the way people make day-to-day debit transactions. Despite that, the majority of cellphones have no security software on them.

At least 79% of consumers are knowingly using unprotected cellphone phone handsets, while 15% are unsure of security levels, according to a recent poll of 2 000 cellphone users in the UK, US and Japan.

The research, undertaken by Datamonitor and McAfee, and unveiled at the Mobile World Congress in Barcelona in February, also showed that 86% of users are worried about security risks posed to their cellphone handset, such as fraudulent bills, or information loss or theft.

"The cellphone space is fraudsters' biggest opportunity for the future, largely because many people still see their phone as a communication device, rather than something that they have to keep secure," adds Day. Britain's Orange is one of 12 global mobile phone operators currently running trials of contactless mobile payment services as a precursor to commercial launches.

The trials -- in Australia, France, Ireland, South Korea, Malaysia, Norway, the Philippines, Singapore, Taiwan, Turkey and the US - are part of the GSM Association's "pay-buy-mobile" initiative, designed to provide a single global approach to mobile contactless payments.

The trade association represents 700 cellphone operators in around 220 countries.

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