Mobile Payments: A New Frontier for Criminals

Eddie Lee has created an app that lets him steal a credit card by simply waving his Samsung Nexus S phone over a leather wallet tucked into the back pocket of a stranger’s jeans. He can then walk into a nearby store and tap his phone at a cash register to charge a sandwich, a coffee—or even a flat-screen TV—to the card.

Fortunately, Lee’s not a thief but a security expert paid to find vulnerabilities in wireless payment technologies. By 2015, consumers worldwide will buy $1.3 trillion worth of goods with their phones and tablets—four times the amount today, forecasts Juniper Research. The expectation is that fraud will account for 1.5 percent of all mobile payment transactions in four to five years, says Avivah Litan, an analyst at tech researcher Gartner. “There’s huge concern,” says Mike Urban, director of financial crime solutions at Fiserv, a Brookfield (Wis.)-based technology company that caters to banks and mortgage lenders. “Potentially, it could be billions of dollars a year in losses.”