ProtectMyID

Nikki Junker, Identity Theft Resource Center

Remember the days when a phone was for calling people?  Well, those days are long gone now.  The technology began with phones, and then evolved to include car phones, then mobile phones, and now smartphones.  The next generation of phones coming out, which seems to do anything you can imagine, will probably have its own name – superphones perhaps?  One of the necessities the smartphone has taken on to replace is the wallet.  A smartphone has already challenged the necessity of regular phones, computers, camcorders, cameras and GPS devices, so why not a wallet too?

The ability for your smartphone to serve as your wallet is enabled by NFC technology, which stands for Near Field Communication, a technology that allows information to be transferred between devices within close proximity of each other.  Therefore, if your banking information is stored on your smartphone, you could transfer it to a point-of-sale device by putting your smartphone close to it. The process is similar to a speed pass at the gas pump or the fast pass lane on a toll road. The idea of being able to spend money with your phone may be confusing, if not downright scary, but should it be?

First, let’s look at the positive aspects of NFC technology:

• It is convenient:  Instead of lugging around 10 different plastic cards you would have only a phone to carry. No digging in your purse for that department store card you hardly use or having so many cards you don’t even know when you have lost one until quite some time later.
• It can save money: Google Wallet, which is one example of NFC technology, has come up with a service called “Single Tap”, which makes it so that all coupons and rewards that are applicable to a purchase are used at the time of purchase.

Now, for the negative aspects of this new technology:

• Limited availability: Currently, few providers carry NFC technology-enabled phones. And, as of the time of the writing of this article, on the financial end only one major credit card company has teamed up to roll out the new technology.  Therefore you must have a card from that provider or buy a pre-paid card.  If you have these prerequisite items you can use NFC technology right now at many Pay Pass Merchants.  But, of course, the retailer must also have the Pay Pass technology in order to receive your payment.
• Safety: There have been fears of security issues with NFC technology, with many wondering how easy it is for an outsider to read the information being produced through NFC technology.  The technology is currently designed so that banking information can only be transmitted when activated by a pin.  During the short transaction time, the Smartphone must be within a certain distance of the reading device.  That addresses the fear of your information being broadcast to the entire world every time you make purchases, but what if your phone is hacked?  Hackers are moving their targets to mobile devices, so how is your financial information going to be protected if your NFC-enabled smartphone is hacked?  One NFC-software provider has stated that even if a user were to download malware to a phone which would give hackers access to the phone’s entire Operating System, the chip that holds the financial information for NFC-related transactions would remain safe.  The phone’s hardware and NFC memory chip are even separate.  But, with hackers being as ambitious as they are these days, we have to wonder how long it will be until they figure out how to surpass these protections.
• Tracking: In the age of the internet, information is valuable.  Where consumers frequent and how much they spend translates into dollars and cents to companies who can sell this information to companies to target those consumers.  Many companies have already been in the hot seat with the public over the information they gather from tracking users, so this would be one more way for that information to be gathered.

There are more benefits and potential risks with NFC technology as you dig deeper into both the technology and sociological aspects, but the above points show what the argument boils down to.  It is the same issue surrounding almost all of the incredible new technology that is coming out right now.  How much security are consumers willing to sacrifice for convenience?

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