Mobile Payments: Are They More Secure Than Credit Cards? (2024)

With all the buzz that’s been surrounding our online privacy, cybercrime has become an important issue in everyday life. After all, we trust our most sensitive information to many different websites, believing that they have the safeguards in place to keep our private information private. Unfortunately, our data isn’t safe at all ‘a fact that’s made clear by the large number of data breaches and cases of identity theft that continue to grow each year. Though encryption and cybersecurity are getting more sophisticated every year, so are the hackers intent on stealing our data. Because of all this, many people are worried about the trend toward mobile payments isn’t secure ‘that it will open them up to having their financial and personal information stolen. Others maintain that mobile payments are more secure than credit cards. So who’s right in this scenario?

Chip Cards vs. Magnetic Strip

Recently, most new credit cards have started to feature chip technology, in addition to the traditional magnetic strip. This chip technology is more secure than swiping a card, because it doesn’t store the card number and name of the person in the system ‘it generates a code unique to that transaction, rather than providing the vendor with the actual credit card information. This makes it much harder for hackers to access the credit card number. For consumers, this is a good thing ‘it reduces the possibility for another big retail hack, like the one that occurred at Target (40 million credit card numbers stolen) ‘but chip card technology might not actually be the most secure way to pay.

Are Mobile Payments Secure?

At first glance, mobile payments may seem less secure than credit cards, but not when you think about what happens when the transaction actually occurs. Traditional credit cards rely on the POS machine collecting the credit card information, as well as the user’s name. This is then stored ‘where it can be accessed by savvy cyber criminals. The card must then be reissued, and fraudulent charges must be handled. Chip cards make the process more secure by withholding the actual card information and instead generating a unique code for the transaction. It’s much harder to access sensitive information this way, and it’s this system that mobile payments are based on as well.

Mobile wallets are tapped against a card reader, which then generates a unique code as well. What makes mobile payments potentially even more secure than chip cards is that mobile payments can be set up to require a code and/or fingerprint, adding an extra layer of security to the process. With a chip card, only a signature is required ‘which doesn’t act as much of a deterrent for thieves.

Faster and More Efficient

Besides their enhanced security, mobile payments have other perks. Chip cards have drawn criticism for being slow and inefficient. Sometimes, processing a payment can take up to 10 seconds or more. Mobile wallets complete the same transaction in a fraction of the time, and send a receipt automatically ‘the entire process can take only seconds. In busy stores, this is a win for retailers and customers alike.

Changing Times, Same Opinions

Mobile payments may be more secure than using a credit card, but how many people are actually taking advantage of this technology? As of 2016, only 46% of US consumers had ever used a mobile payment option, though that number grew significantly from 2015 (28%). Mobile payments are clearly catching on, they’re just taking some time to see widespread usage. That’s not surprising, considering many people still feel that mobile payments aren’t as secure as traditional and chip credit cards. Older Americans, who are less likely to have smartphones, may also be affecting the overall usage of mobile payments. The assumption that mobile payments aren’t secure may be slowing down their adoption a little, but the future is clear: mobile wallets are here to stay, and they’re only going to get bigger.