Thinking Of Moving Your Wallet To Your Phone? Read This First!

While the cellphone has become an essential business tool, it can also be an open door to fraudsters. It is therefore critical that businesses learn to treat modern smartphones in the same way as computers and to assess risk in those terms.

Smartphones earn their name by their ability to run programmes or apps. There are literally hundreds of thousands of these available for every possible purpose. Most of these are perfectly legitimate and safe, unfortunately a few are not.

Those most at risk are users of the Android platform, which has now overtaken iOS to become the leading smartphone operating system with over 50% market share. Recent research by MWR Labs,  the research arm of MWR InfoSecurity, indicates that there is a serious and significant problem with security vulnerabilities in Android handsets. In particular the research suggests that manufacturer-added software could lead to compromises, with as much as 64% of manufacturer-added applications being identified as a potential cause of security issues in some handsets. This means that the flaws are actually built in to the handsets and so users can not avoid them simply by being cautious with their downloads on Google play.

These security issues are of even more concern in the light of the fact that small businesses are turning to the phone as an alternative to traditional POS (Point of Sale) technology. Many small businesses have traditionally been cash-only as standard POS terminals are both an extra expense and an extra piece of equipment to keep safe. This causes obvious security issues, making small businesses an attractive (and often easy) target for thieves. It can also be a source of friction in terms of accounting. As well as the challenges of keeping track of cash being paid in and out (particularly for small amounts where receipts may not be given), there is also an increasingly negative view of cash payments by government authorities. Tax offices have always viewed them with suspicion and the hostility towards them is growing. Consumers, too, are being encouraged to view electronic payments as a safe, convenient and attractive way of making payment. Chip and Pin has long been accepted as a key breakthrough in terms of consumer safety. Contactless payments, or Virtual Wallets, are a more recent innovation. Showcased at the London 2012 Olympics, they are already gaining substantial ground. Both Visa and MasterCard are now moving to phone-based payments using NFC (Near-Field Communication). There is simply less need for consumers to carry cash on a day-to-day basis.

The reality is that phones are now indispensable for both consumers and small businesses and both phone manufacturers and networks will try to do everything they can to make them continually more attractive. This has many advantages in terms of convenience and cost savings; however it does mean that small businesses need to be fully-aware of related security issues and make sure they are addressed.

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Kit MacLean

After 15 years working in various forms of IT support in the corporate world, I made my debut as a freelancer. When I'm not working with computers or writing about computers, I'm generally playing poker at one, walking the dog or watching old DVDs.

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