Cash was once king — but no longer, thanks to a bevy of much more convenient payment methods, mobile wallets chief among them. If you have been living under a rock, a mobile wallet is a digital payment method that allows you to store financial account information on your mobile device and make payments both online and in suitably equipped stores.
Globally, there were over 440 million mobile wallet users in 2018, and the expected number of global users for 2020 is upwards of 760 million. Though mobile wallets are much more convenient than other payment methods — you need only carry your mobile device, which you likely do anyway, instead of a bulky wallet with cash and cards — there is one aspect of the mobile wallet that is hindering more widespread adoption: security.
Mobile devices are famously insecure, and storing precious financial information on them seems, to many, like a significant mistake. Fortunately, mobile device developers have worked with security researchers to identify potential flaws and close gaps, especially in the NFC technology that mobile wallets utilize. Unfortunately, not all opportunities for fraud have been eliminated.
The Weakest Link in Mobile Wallet Security
Many of the threats to mobile wallet security are general and well-known threats to any online system. For example, phishing attacks remain rampant, in which cybercriminals manipulate mobile wallet users to share their financial information or otherwise make payments for false reasons. Malware, too, can allow cybercriminals to gain access to some mobile wallet applications and steal financial data. However, both of these are primarily concerns for users, who need to install mobile security apps and practice proper cyber hygiene to stay safe.
In contrast, the weakest link for most mobile wallets is in the enrollment process, when users add payment cards or bank accounts. To make the process easier, many mobile wallets allow users to snap pictures of the cards or account information, which the app then uses to pick out key information for making payments.
The fatal flaw is that, in most cases, anyone can add any payment information, as long as the information is correct, regardless of whether they are an authorized user or not. As a result, losing track of a payment card, even for only a few minutes, could allow someone to connect their mobile wallet and begin racking up charges using your financial accounts. Some meager authentication checks that some mobile wallets boast have been shown to be easy to bypass, meaning another solution is necessary to verify identity and ensure legitimate payment account use.
Why Blockchain Could Save Mobile Wallets
Blockchain is a record-keeping technology that is proving all but impossible to hack. Large blockchain networks have so many millions of copies saved on user devices that cybercriminals cannot economically modify individual data points without leaving a trace or gain sufficient processing power to control the networks.
Applying blockchain technology to mobile wallets entails a credentialing system, wherein users maintain credentials within their wallet that verify their identity. This mobile accreditation wallet makes it much more difficult to add payment account information that isn’t known to belong to a user, protecting original card owners and making mobile wallet tech much more secure. Plus, it opens up other doors for the mobile wallet, for use in authenticating identity at work, in banks and at other locations where certain people might lack access.
It is important to note that mobile wallets and digital wallets are not inherently the same. Digital wallets store financial information, but they come in a number of different formats and provide a number of different services. For example, peer-to-peer payment platforms like Venmo and the Cash App are technically digital wallets. A mobile wallet is a type of digital wallet that stores financial information and allows you to pay at physical locations using “tap to pay” features. Both digital wallets and mobile wallets benefit from blockchain technology, but other types of digital wallets can suffer from a larger plethora of security risks that mobile wallet users do not necessarily need to agonize over. Blockchain is an incredibly powerful and versatile tool that hasn’t been applied nearly enough. By taking advantage of blockchain in your mobile wallet, you can take a step into the future, gaining greater payment convenience and keeping your mobile payment information totally safe.