Virtual Wallets Bring Risks as Well as Rewards.
Android Pay. Apple Pay. Samsung Pay. If you own a smartphone, you probably have at least one of these built-in apps. And you have probably been prompted to enter your credit, debit and rewards card information to create a “virtual wallet” you can use to make point-of-sale transactions a breeze.
It’s a nice idea and undoubtedly the way of the future. But if you’re wondering whether it’s safe or productive to store such highly sensitive data on a portable device, you’re not alone. Let’s attack the question from three angles: performance, security and convenience.
If you’re going to leave your plastic at home, your virtual wallet had better work. When it does, it’s almost like magic: You hold your phone up to the card reader, push a button, and your transaction is completed. But it takes two to tango. Apple Pay and Android Pay both require retailers to install card readers that will accept them, and adoption has been slow.
Samsung has attempted to go a different route, using magnetic secure transmission (MST) technology in addition to the near field communication (NFC) platform that Android and Apple use. In theory, that allows Samsung Pay to work with any card reader, which takes the burden of adoption off the retailers. However, it’s only available on certain Samsung-branded phones, and it’s not foolproof. When the app and the card reader don’t agree, you have to pay the old-fashioned way.
If any amount of personal data can be gleaned from your lost or stolen smartphone or tablet — including emails, photos and official documents — you should adjust your security settings to protect it with a screen lock. If you store card information in a credit app, you really should protect it with a screen lock.
Locking your mobile device is the first line of defense to ensure someone can’t just pick it up and go to town. Whether you use a password, a PIN, a lock pattern or even your thumbprint (if your phone supports it), the important thing is to erect a barrier between other people and your personal business.
Additionally, every current smartphone and tablet operating system allows you to remotely wipe your device. If you plan to use your phone as your wallet, make sure that feature is enabled, and make sure you know how it works before you need it.
There are many cloud services you can use to back up photos and other files on an ongoing basis. Using such a service (with a strong password) ensures you won’t lose any files. And you won’t have to hesitate to wipe your device the moment you realize you’ve lost it.
So if your virtual wallet works and you know your information is protected, should you save your credit card on your smartphone? For the sake of convenience, yes. You can leave your wallet — which can be stolen just as easily as your mobile device — at home, and you won’t have to cart around all your rewards cards.
Going all-in on a payment app is good for your inner geek. It’s not too late to be considered an “early adopter.” And as more of us use virtual wallets, manufacturers and retailers will feel more compelled to support the technology and add features. It might not be long before every card you possess — including your driver’s license, proof of insurance, business card and workplace access card — is stored on your smartphone.
However, the technology remains a work in progress, so you might prefer to wait for your next new phone before you enter your credit card or debit card information into a payment app. Consider experimenting with rewards cards first and see how that works.
And if you are uncomfortable with the idea of having personal information stored on your phone or tablet, or you just aren’t quite ready to give up your old wallet, the best advice is to wait and see. The shift toward virtual wallets is coming, but your plastic cards will continue to work for the foreseeable future.
Locking your smartphone is only one way to protect your personal data and credit profile. Check out our recent entry on monitoring your credit!