Study looks at security risk of paying with smartphones

June 13, 2013 12:00:00 AM PDT
Have you ever been standing in line and watched someone pay with their smartphone? Maybe you've done it. You may have concerns about whether it's safe, so 7 On Your Side looked into that issue.

There was a huge new report on this done by CALPIRG. So you've got to ask yourself, is it safe and do you really have any choice about adopting this technology? Well, yes and probably not.

It's a normal day at one of the city's better coffee houses with customers lining up. We took a look at Jackson Place Caf? and how customers there pay for their purchases, however, it's not standard... not yet.

A customer's payment has just been made with a smartphone app growing in popularity. It's called Square.

"The method... this is cash, Square and then it will show you Visa, American Express," said Sofia Airaghi from Jackson Place Caf?.

Here is his purchase: $3.25 for a cappuccino. But how does she know it is really him? A photo of the account holder is sent along with the payment for the cashier. With that, the payment is approved.

Airaghi says this is becoming more common all the time. She told us, "Yes at my other job, which is also a caf?, we do this. I am in a dance company and we also use it to pay for class and our merchandise."

There are predictions that by 2016, $30 billion a year will change hands this way. Predicted too is the beginning of the end of plastic credit cards. But not credit card services.

"You can load different types of cards onto these apps and we recommend that consumers load credit cards because that provides you with the highest level of coverage and protection," said Jon Fox from CALPIRG.

If there is a problem with the purchase, consumers are protected.

CALPIRG, California Public Interest Research Group, has just done an extensive study of these payment systems and says they are both safe and effective. But how smart is it to use a smartphone as your wallet. We know half of the robberies in San Francisco now involve smartphones.

Finney: "Isn't it like putting your cellphone and wallet together?"
A: "In a sense it is. But being a cellphone it has built in technologies that add security. For example you have to activate these apps with a pin code."

And then, there is that photograph.

Finney: "Have you ever had someone that was not the person the picture showed?"
Airaghi: "No. But I have some really funny photos."

You can get a copy of the CALPIRG report. It really lays out all of your rights.

CALPIRG report: The Future Is Calling


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