Are Mobile Payment Apps Safe?

By Bob Haegele · February 14, 2023 · 10 minute read

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Are Mobile Payment Apps Safe?

Mobile payment apps are certainly convenient, and, when compared to other payment methods, they are quite safe. They allow you to make payments with devices like smartphones and smartwatches, and can be even faster than using, say, a debit card.

That said, you should know a few details before deciding to use a payment app and when deploying one in daily life to keep your hard-earned cash as safe as possible. This guide will help you with such questions as:

•   What are mobile payment apps?

•   Are mobile payments secure?

•   What are the pros and cons of mobile payments?

•   How do I use a mobile payment app?

What Are Mobile Payment Apps?

Mobile payment apps enable contactless payments by waving a smart device at a payment terminal. This can be faster and touchless versus pulling out a debit card or credit card and then inserting it into a reader.

In addition, mobile payment apps allow you to send and receive money with friends and family. These apps can be installed on devices like smartphones, smartwatches, and tablets. Many payment apps are available, but common choices include Apple Pay, Google Pay, Samsung Pay, and Venmo.

Some mobile payment apps have a wallet feature that allows you to store credit and debit cards and things like boarding passes and tickets. Instead of having to carry each card individually, you can load them all into your mobile wallet.

How Mobile Payments Work

Typically, you link payment cards in a mobile wallet or a while on a screen that uploads your payment method. You’ll need basic information such as the card number, expiration date, and CVV (those few digits, often found on the back) to link your card. When you finish filling in your card’s information, you may have to verify it with your bank.

Then, instead of paying with the card directly, you use your device to pay using the payment app. Your device sends your necessary information via what’s known as near field communication (NFC) but without revealing your actual account numbers, which is a welcome security feature.

Benefits of Mobile Payments

Mobile payment apps have several benefits that can make them preferable in our increasingly connected world. Some of those benefits include:

•   Convenience: On any given day, you may find you need to carry a wide variety of cards. Not just credit cards and debit cards, but also things like loyalty cards, boarding passes, and sporting event tickets. All of these can be loaded into popular mobile payment apps, so you have everything you need in one place.

•   Security: When you wave your device to pay with your mobile app, it doesn’t share your card number. Instead, it generates a series of random numbers (called a token) for each transaction you make. Plus, mobile payment apps require you to enter a PIN (personal identification number) or authenticate with biometrics like a fingerprint or face ID with every transaction. So, even if someone gets access to your device, it’s unlikely they would be able to use it to make purchases.

•   Speed: Paying with a mobile payment app tends to be much quicker than paying by swiping or inserting your card. In fact, it can be a way to send money instantly (or close to it), while swiping or inserting can take several seconds. This benefit may seem minor in the grand scheme of things, but it can make a big difference when you’re in a rush.

Are Mobile Payments Safe?

Usually, mobile payment apps are safe compared to other payment methods. Most of that safety comes down to the tokenization mentioned in the previous section. Not only are these tokens different from your card number, but they are also encrypted and unique for each transaction.

This renders “sniffing” of mobile payment data (a common hacking method) virtually useless. Indeed, mobile payments are usually safe in most scenarios in the same way that mobile banking is safe. However, this doesn’t mean mobile payment apps are completely guaranteed to never have security issues or other glitches.

Consider this scenario:

•   Most of these apps allow you to send money directly to friends and family to cover the portion of the meal you had together. To be sure, that can be more convenient than dealing with cash.

•   However, there may not be a lot of safeguards in place when you send money with a mobile payment app. If you have a new person in your friend group and they accidentally send money to the wrong person (whose username is just one letter or digit different), it can be difficult to get it back.

This shows that mobile payment apps are safer in some contexts but aren’t perfect. The answer to “Are payment apps safe” may never be 100% certainly “yes.” One good way to protect yourself from problems is to always check that your money is going to the right place when paying with a mobile payment app.

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Drawbacks of Mobile Payments

Like all technologies, mobile payments have their pros and cons. Here are a couple of the downsides:

•   While the popularity of mobile payments has rapidly expanded, there might still be some merchants that don’t accept them.

•   You may find that the payment terminal has a technical issue preventing it from accepting mobile payments. Thus, you might occasionally find you aren’t able to make a purchase by, say, waving your phone.

•   There are many different players in the mobile payments field, all of whom may have different policies. For example, the guidelines can be murky around things like data sharing. In addition, many mobile payment apps are available, which can create confusion as people navigate this new technology.

•   While rare, money scams and hacking involving mobile payments are possible.

Features of Payment Apps to Look Out For

Because there are so many mobile apps available right now, you should look out for certain features. Here are some key features to keep in mind:

•   Ease of use: One of the best aspects of mobile payment apps is they tend to be convenient and easy to use. If you find yourself struggling to link your cards or make payments, the app you are using may not be the best choice for you.

•   Security: The other great thing about mobile payment apps is that they sometimes provide greater security than credit cards alone. You’ll want to ensure your payment app has security features like two-factor authentication and PIN or biometric verification for purchases. It should also never display your full card number in your wallet or payment method screen.

•   Privacy: Privacy is increasingly an important part of any app’s policies, especially as more and more of our data lives online. However, it can be tough to know how your data is being used without diving into documents like the app’s terms of use and privacy policy. Still, it may be helpful to at least skim them if privacy is important to you. If the app sells your data to advertisers, it should be disclosed in these documents.

You may also feel safer going with a widely recognized mobile payment app, one that has many users and very positive reviews.

How to Use a Mobile Payment App

Each mobile payment app is different, but there are usually just a few steps to using one. Typically, this is how they work:

•   Start by downloading your payment app of choice. Or you may already have a payment app loaded on your device, like Apple Pay, Google Pay, or Samsung Pay.

•   Once you have your payment app on your device, link the payment card(s) you want to use with it. At this stage, you may have to complete a two-step verification process. For example, you might receive a verification code from your bank, or you may have to call the bank.

•   After completing the verification process with your bank, your payment app should be ready to use with your linked cards. You can use your payment app (or a contactless credit card) if you see the NFC symbol when you pay. There are a few different versions of the NFC symbol, but it usually shows an image of waves that increase in size.

•   Note that payment apps usually require you to add a PIN or biometric unlock (your fingerprint or face, for instance) to your phone and enter it before each payment.

•   Once you unlock and hold your device near the terminal, you will likely see an indication on your phone screen that the transaction is successful. You may also hear an alert sound. When that happens, ta-da: You’ve paid with your mobile payment app.

Recommended: How to Send Money to Someone Without a Bank Account

Tips to Safely Use Mobile Payment Apps

Although mobile payment apps can be safer than other payment methods, there are a few steps you should take to ensure they are secure:

•   Set up payment notifications: These will alert you to any payments on your card, so you will know immediately if someone gains access to your information.

•   Enable two-factor authentication: Two-factor authentication is an extra layer of security that makes it more difficult to gain access to your account. For example, you must enter a code from a text message or email to verify it after you link a payment card.

•   Enable automatic updates: Mobile payment apps frequently receive updates, which might include security features. Auto-update is often toggled on as a default setting, but double-check it’s enabled on your device.

   For instance, open the Google Play Store app on Android and tap the menu icon > Settings > Auto-update apps. On iPhone, open Settings > iTunes & App Store and enable App Updates.

•   Check that you are sending money to the right person. It can be difficult to get your money back if you send it to the wrong person using a mobile payment app. Before sending money, double-check (and perhaps triple-check) the details on your screen match those of the person who should receive the money.

•   Beware of scams. Mobile payment apps are a common way for scammers to get money from unsuspecting victims. An easy way to prevent this is to avoid using a payment app to send money to people you don’t know.

Recommended: Key Features of Mobile Banking

The Takeaway

Mobile payment apps allow you to pay using a smart device like a smartphone, smartwatch, or tablet, and to do so in a fast, contact-free manner. They may also allow you to send and receive money with friends and family. These apps can be safer than other payment methods, like credit cards. However, they can sometimes be fallible, so you should always be careful when sending money.

Another great way to safely manage your money is with a high yield bank account. When you open an online bank account with SoFi, you will spend and save in one convenient place, earn a competitive annual percentage yield (APY), and pay no account fees, which can help keep your cash growing. Plus, qualifying accounts with direct deposit can access their paycheck up to two days early, a very nice headstart indeed.

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What are the pros and cons of mobile payment apps?

The pros of mobile payment apps include their convenience, security, and speed of payment processing. Cons include that they aren’t yet accepted everywhere and are sometimes used by scam artists.

Does card fraud happen on payment apps?

There have been some instances of card fraud on payment apps, like when scam artists use flaws in the app’s design to extract money from victims. However, thanks to features like tokenization (encryption of your personal financial information), most payment apps make fraud much more difficult.

Are payment apps stealing my information?

Some payment apps might use your information in certain ways, like capitalizing on it to market products or selling it to advertisers. However, these details are often laid out in the app’s policy documents.

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