Common Security Challenges For Mobile Payment Systems

What Are Mobile Payment Systems?

Mobile payment systems allow users to make payments or send money using their mobile phones rather than cash, cheques, or credit cards. Some common types of mobile payment technologies include digital wallets, mobile banking apps, and contactless payments using near field communication (NFC). 

According to a report by Juniper Research, the global value of mobile payment transactions is projected to reach $8.6 trillion by 2024. However, the growth of mobile payments has also introduced new security challenges for mobile payments due to the sensitive financial data being accessed and transmitted through mobile devices.

7 Security Challenges for Mobile Payment Systems

Here are some of the major “security challenges for mobile payments” that need to be addressed:

1) Fraud and Identity Theft:

Criminals can steal users’ personal and financial information, like name, address, credit/debit card numbers etc. from their mobile devices through malware or by hacking into weak authentication systems. They can then use the stolen data to commit payment fraud and identity theft. They may create fake user profiles to make fraudulent transactions. 

This can result in financial losses to users. It can also damage user’s credit reputation if their identity is stolen. Mobile payment systems need robust security and user verification mechanisms to prevent fraudsters from accessing user’s data and committing payment scams.

2) Lost or Stolen Devices:

If a mobile device with payment credentials stored on it is lost or stolen, it results in a major security risk. With access to the lost or stolen device, a malicious actor would be able to make unauthorised payments from the user’s accounts linked to mobile wallets or payment apps on the device. 

They could transfer funds, make purchases, or access other sensitive personal information also stored on the device like contacts, messages, photos etc. This makes securing access to the device and payment credentials crucial. Systems need to allow users to remotely wipe data or lock access to payment features if a device is reported lost or stolen

3) Mobile Malware:

Mobile malware refers to malicious software that targets mobile devices like smartphones and tablets. Viruses, worms, trojans etc. can infect mobile devices without the user’s knowledge and then monitor them silently in the background. A recent report found that 1 in 20 mobile web transactions involved malware in 2019.

Once installed, mobile malware can access private user information like bank account credentials and payment passwords that are stored on the device. It can also overlay screens to steal information entered by the user. Effective anti-malware solutions are required to detect and remove such malware from mobile devices.

4)  Phishing & Smishing :

Phishing and Smishing refer to fraudulent attempts to obtain sensitive information like usernames, passwords and financial details by masquerading as a trustworthy entity through electronic communication channels. Phishing is done through fraudulent emails while Smishing uses SMS/text messages. 

Criminals use socially engineered messages to lure victims into clicking links leading to fake websites asking for personal or banking login details. This enables them to access users’ accounts and steal money. Regular awareness and education of users can help reduce falling for such social engineering attacks.

5) Weak or Default Passwords:

Many users tend to use simple passwords for their mobile payment apps and online accounts like “123456” or “password” since they are easy to remember. However, these weak passwords can be easily guessed or cracked by hackers within no time using brute-force attacks or password cracking software. 

This enables unauthorised access to user’s payment accounts. Hackers can then make fraudulent transactions. To prevent this, mobile payment systems should enforce strong password policies and educate users on using unique, long and complex passwords that are difficult for hackers to guess.

6) App Vulnerabilities :

Security flaws in mobile payment apps themselves may allow attackers to exploit weaknesses and steal funds or user data. A recent study found vulnerabilities in over 25 financial apps.

Mobile payment apps face vulnerabilities just like any other mobile application.

Hackers can analyse app codes and try to find security loopholes that can provide unauthorised access to backend servers containing sensitive payment details. They may also try to reverse engineer apps to identify hard-coded passwords or cryptographic keys that secure communications. Regular security audits and updates are needed to patch any issues found.

7) Network Security Risks:

Mobile payment systems rely on wireless networks like WiFi, Bluetooth, and cellular networks to transmit sensitive financial data between the user’s mobile device and payment servers. These networks are susceptible to security threats like eavesdropping, man-in-the-middle attacks, and spoofing attacks. 

Attackers can intercept payment details and account credentials as they are transmitted over the air. They can also spoof legitimate payment servers and networks to obtain people’s payment information. Strong encryption and other network-level security measures are needed to protect financial data.

How to Secure Mobile Payments: Best Practices

Here are some effective measures that can help tackle the “security challenges for mobile payments”:

1) Use Multi-Factor Authentication (MFA)

Mobile payment systems should utilise multi-factor authentication to authenticate users and reduce the risk of fraudulent access. With MFA, in addition to something the user knows, like a password, the system also requires something the user has, like a physical token or biometric authentication using fingerprints. 

This makes it much harder for hackers to access accounts even if they have the user’s password, as they would also need the additional authentication factors, which are not as easily guessed or stolen.

2) Encrypt All Data:

Mobile payment systems should encrypt all sensitive data both in storage and in transit to ensure confidentiality and prevent unauthorised access. This includes encrypting payment card details, bank account information, personal user details etc. stored on the mobile device or server databases. 

The data should also be encrypted during transmission over networks using secure protocols like SSL/TLS. Strong encryption algorithms like AES 256 should be used to encrypt the data at rest and SSL/TLS should be implemented to encrypt data in motion.

Protecting Your Mobile Payments With Ntt Data Payment Services India

NTT DATA Payment Services India offers a complete payment solution to advance both your offline and online businesses. From online payment gateway and mPOS to IVR payments and Bharat QR Scan and Pay, we ensure convenience and safety for all your payments. 

NTT DATA Payment Services India offers a full suite of payment processing solutions and services to help merchants and financial institutions address security challenges for mobile payments.

Conclusion

As mobile payments continue to grow rapidly, protecting users from the various security challenges of mobile payments is important. With the right security practices, technologies, and service providers, the risks can be effectively mitigated while ensuring a seamless payment experience. To understand how mobile payment gateways play a key role in enhancing security, check out this article on what is a mobile payment gateway integration.

FAQs

1. Are mobile payments really secure for everyday use?

Yes, mobile payments are secure when you use trusted apps, enable device locks, and avoid public Wi-Fi. However, risks like malware, phishing, and weak passwords still exist, so following basic security practices is essential for safe transactions.

2. What should I do if my phone with a mobile wallet gets lost or stolen?

Immediately lock your device using “Find My Device” (Android/iOS), remotely wipe your data if necessary, and contact your bank or wallet provider to freeze transactions. Always enable fingerprint/face ID and strong PINs to prevent unauthorised access.

3. What are the most common security challenges for mobile payment systems?

Some of the major security challenges include fraud and identity theft, mobile malware, phishing and smishing attacks, insecure Wi-Fi networks, and app vulnerabilities. These threats target sensitive financial data stored or transmitted via mobile devices.

4. How can I keep my mobile payment apps secure?

Use strong, unique passwords, enable two-factor authentication (2FA), keep your apps updated, and download payment apps only from official app stores. Avoid sharing OTPs or clicking suspicious links that may lead to phishing pages.

5. Is it safe to use public Wi-Fi for mobile payments?

No, public Wi-Fi is not safe for financial transactions. Attackers can intercept data through unsecured networks. Always use mobile data or a trusted, private Wi-Fi connection when making payments, and ensure your device uses encrypted connections (HTTPS/SSL).