When a Wal­let Is No Bet­ter Than a Zi­ploc

Mo­bile Pay­ments ▶ Many star­tups aren’t prop­erly se­cur­ing their users’ data ▶ “There’s a lot of two en­gi­neers and a goat”

Bloomberg Businessweek (North America) - - Focus On/Security -

“I am hop­ing my kids don’t do it,” says Sarah Jane Hughes. The In­di­ana Univer­sity at Bloom­ing­ton pro­fes­sor of com­mer­cial law isn’t al­lud­ing to sex or drugs. She’s talk­ing about the dan­gers of mo­bile pay­ments ser­vices, a sub­ject that brought her to Capi­tol Hill in De­cem­ber for a con­gres­sional hear­ing. She’s not the only one sound­ing an alarm: In Septem­ber al­most half of about 900 mem­bers of Isaca, an as­so­ci­a­tion of IT pro­fes­sion­als and risk man­agers, said mo­bile pay­ments aren’t se­cure.

In 2016, 148 mil­lion peo­ple around the world will reach for their handsets to make pay­ments at in- store point- of­sales ter­mi­nals, ac­cord­ing to a re­port from Ju­niper Re­search. Many mil­lions more will use pay­ment apps such as Dwolla or Venmo to send money to friends and busi­nesses.

The boom is cre­at­ing op­por­tu­ni­ties for hack­ers and thieves, and se­cu­rity gaps in some of the apps are leav­ing buy­ers as well as sellers ex­posed. Ac­cord­ing to a Septem­ber re­port by re­searcher Lex­isnexis, mer­chants re­ported that “al­ter­na­tive pay­ment meth­ods,” a cat­e­gory that in­cludes Paypal and other non­bank fi­nan­cial com­pa­nies, ac­counted for 21 per­cent of all fraud in 2015, up from 13 per­cent the pre­vi­ous year.

Along with a hand­ful of well-known com­pa­nies such as Ap­ple, Google, and Sam­sung, the mo­bile pay­ments

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