NEW YORK (MainStreet) —Perhaps the epitaph can wait for the old, plastic credit card.
While digital wallet app use is growing, it is doing so slowly. To make matters worse, some are warning the new way to pay leaves many risks.
“I think there are definitely privacy and security concerns,” said Justin Brookman, director of the Privacy Project at the non-profit Center for Democracy & Technology. “These types of transactions allow for a lot more data to be transferred than the traditional credit card transaction.”
There is no denying the use of digital wallet apps — such as those offered by Google and PayPal — are on the rise. A recent report from the research and advisory firm Forrester said mobile payments in the U.S. will grow from $12.8 billion last year to $90 billion by 2017 — with in-store mobile payments making up $41 billion. Even with that increase, however, it only would mean 9% of all e-commerce is done with a mobile device.
The issues concerning care digital wallet apps take with consumers’ personal information took center stage this this March in a report by the Federal Trade Commission on mobile payments. The report highlighted that unlike typical credit card transactions, where the card company does not receive a customer’s buying habit information and the retailer does get contact information — digital wallet purchases often allow for personal data to be garnered by retailers, operating system manufactures, app developers, mobile phone carriers, loyalty reward program administrators and others. The data collected from mobile purchases — such as details on purchases, physical location and personal contact information — can help companies build their own profiles on consumers.
“The use of mobile payments raises significant privacy concerns, due to both the high number of companies involved in the mobile payments ecosystem and the large amount of data being collected and the consumer base for it is growing,” the FTC report stated.