Credit Card Debt Management

We’ve discussed the contactless payment trend that requires a consumer to merely wave their payment card in front of a reader to pay at the cash register. We’ve discussed e-commerce, which has unfortunately become a goldmine for identity thieves. The next newer, bigger better innovation is mobile banking and commerce. It is yet another step to further the world’s progression toward doing everything faster, faster, faster.

What is Mobile Banking?

Mobile banking enables consumers to access their personal information through their cell phones, with the help of special software. Mobile banking launched in the U.S. earlier this year amidst a giant media storm. Cell phones and banks are taking sides and picking teammates. Citibank is the only bank thus far who has refrained, offering mobile banking that is compatible with all mobile service providers.

In India, where the current number of mobile banking users stands at about 1.6 million, mobile service provider Ngpay is estimating 250 million users by 2011.

Will Plastic Credit Cards and Debit Cards Become Obsolete?

Mobile commerce would enable consumers to click through the payment options on their cell phones, which some companies are proposing be referred to as “mobile wallets.” The development is expected to eventually make debit and credit cards completely obsolete.

“We are planning to introduce mobile wallets and remittances in coming years,” said Rahul N Bhagat, executive vice-president of retail banking at HDFC Bank. “We are looking at getting debit card and credit card services on mobile phones for transactions,” he added.

How Safe and Secure is Mobile Banking? 

This sounds pretty cool, but as with all new inventions, there are some glitches to work out where reliability and interoperability are concerned. The contactless payment concept involves using low-emitting radio frequency signals, or near-field communication technology. Cell phones would need to have chips embedded in them to operate similarly when the mobile wallet technology becomes mainstream. People do a lot on their cell phones. I wonder what, if any, privacy breaches or identity theft cases could result from the new technology? Of course, the same could be said of Internet banking, of which I am a faithful user.

There has been a small amount of controversy over the new RFID-enabled credit cards that allow contactless payment processing. Old cards will soon be obsolete as card issuers began passing around cards like MasterCard’s Paypass, Visa’s payWave and American Express’ Express Pay. Just a quick swipe and you go.

But how secure are these devices? As with all new technology, there will undoubtedly be some glitches to work out. For instance, a Marquette University Law School study cited a security incident with the ExxonMobil Speedpass key fob:

“The Texas Instruments Digital Signature Transponder (DST) used in the ExxonMobil Speedpass key fob features a forty-bit, unpublished, proprietary key that a research team cracked and used to clone a device capable of completing fraudulent gasoline purchase transactions at ExxonMobil stores.”

Proponents of cards issued by major creditors say that security is much higher on the newer devices. They have a cryptogram that changes with each transaction and security measures to prevent other radio frequency ID readers from picking up on the code inside credit cards. For instance, the radio frequency embedded in the cards is very low frequency and cannot be read from further than 4 to 6 inches away.

The Marquette University report questions whether this security is enough. For instance, even though the credit card devices may be nearly impossible to clone, how easy might it be for one to swipe the credit card number? This wouldn’t be through the storage of that information on any one computer system, because there won’t be any such storage. Instead, the credit card numbers might be swiped through an RFID reader, one would suppose. One thing is for sure, the world will be a much more secure place for a certain amount of time until the identity thieves figure this one out!