Cyber Criminals' New Frontier: Mobile Payments
NEW YORK ( TheStreet) -- As Google(GOOG) , Visa (V) and reportedly Apple (AAPL) get closer to perfecting mobile payments -- the technology that will allow us to pay for goods with a mere wave of our smartphones -- they're up against a significant block: Consumers worried about the technology's security.
Spooked by the spate of recent high-profile cyber-attacks on governments and corporations like AT&T(T) , folks fret that mobile devices and the credit card information stored within could be cyber criminals' next frontier.
About 73% of respondents polled by mobile payments and marketing company Mobio Technologies said security was the most important factor impacting their willingness to use mobile payments.
And while the technology's proponents contend that the new-wave tech is likely safer than using a physical credit card -- which can easily be lost or stolen -- security analysts are skeptical.
"This technology will cause a feeding frenzy for criminals," said Ira Winkler, president of the Internet Security Advisors Group. "Mobile payments sound like a great idea, but there are some basic security problems that can be bypassed."
A Technology in Its Infancy
First of all, it'll be awhile before this technology goes mainstream. Hurdles include a lack of standards between banks (who control and secure users' account information) and mobile carriers (who manage the data transactions), as well as skepticism among merchants who must pay hundreds of dollars extra to upgrade their retail equipment.
Still, the market looms large. Juniper Research estimates that by 2015, the mobile payments sector will reach $670 billion, up from $240 billion this year. Rushing into the venture are dozens of entrants, including tech giants, banks, wireless carriers, credit companies and lots of start-ups.
Former Google CEO Eric Schmidt has pegged mobile payments as a "mega-scale opportunity" for the company. Google's Mobile Wallet product, currently being tested in New York City and San Francisco, lets consumers pay for goods with a tap of their Android at the register via a wireless technology called near-field communication (NFC).
Carriers AT&T, T-Mobile and Verizon (VZ) also recently teamed up with major card issuers for their Isis payments partnership, using a similar technology.
Then there are start-ups like Square, which allow smaller merchants to accept payments through a tiny credit card reader plugged into the phone's audio jack. Square raised funding in June at a reported $1 billion valuation, up significantly from a January round that valued the company at $240 million.
Yet while this next-generation tech promises huge technological benefits to users -- simplicity, saved time and ease of use -- it also holds potential as yet another outlet vulnerable to hackers.
"It's a double-edged sword," said Nick Holland, an analyst with the Yankee Group. "There's a huge opportunity with mobile payments, but there's the possibility of threats."