[Dave Birch] I’ve started reading through the Federal Reserve’s report on “Consumers and Mobile Financial Services” (March 2012) and I’ve already got sidetracked.

The biggest reason respondents gave for shunning mobile payments were security concerns, cited by 42% of the 1,780 people who responded to that particular question on the survey.

[From Fed Consumer Survey Shows Security Concerns Biggest Barrier to Adoption of Mobile Payments | NFC Times – Near Field Communication and all contactless technology.]

Market research consistently shows the same result. And whether consumers really are concerned about security, or whether they are simply labelling a set a vague fears, underlying disquiet about change and a lack of understanding of new technology “security” as a shorthand, there’s no doubt that we (by which I mean the electronic transactions industry) have to do something to communicate to them.

Security tops the list of consumer concerns about mobile payments. Half of all American consumers say potential security and fraud significantly influence their likelihood to use smartphone technology to make purchases in the future.

[From Study: Consumers Unlikely to Abandon Wallets in Favor of Paying With Smartphones — NEW YORK, Feb. 29, 2012 /PRNewswire/ —]

The concerns are particularly acute when you introduce the topic of NFC, RFID, wifi, Bluetooth or any other scary payment-through-the-air technology. Despite the careful threat analysis carried out by the sector, showing the risks to be manageable, an entire industry is being formed to address consumers’ fears, however unrealistic they might be. For example, switches to turn on and off contactless cards.

With this new technology, consumers would simply hold RFID or NFC credit cards in a specified area—for example, on an emblem or some other identifying mark—when making a transaction. As long as the “switch” is held, the card is turned “on.” When returned to a wallet or purse and tactile contact is discontinued, the card automatically turns “off.”

[From Marlin Mickle RFID Tap]

I don’t think this is a new idea at all — I can remember seeing cards like this years ago — but you can see how it might sell. Functionally, it’s pointless. There is no realistic threat model around scanning cards remotely. It has zero usability: I don’t even want to take my card out of my wallet, let alone hold it in a special place. In fact, I don’t even want a card at all – I want to use my phone. The idea does, however, pander to the to the notion that there is a particular vulnerability around contactless and not just for payments. A few weeks ago, a correspondent wrote to point out that someone in the US was selling security pouches for phones.

RFID Blocking for Credit Card & Passports
Blocking GPS Phone Tracking

[From How to stop GPS tracking, RFID Blocking Sleave,]

We don’t want the CIA tracking our purchases from space, so naturally we bought one to try out (actually we bought a couple). We wanted to see if it worked. Well, here you go…

Worked as advertised, although it’s not clear to me why you wouldn’t just put your phone into flight mode. Anyway, we’ll be giving one of these out as a prize at the Digital Money Forum next week, so book one of the last places and come along!

These are personal opinions and should not be misunderstood as representing the opinions of
Consult Hyperion or any of its clients or suppliers


  1. The technological arms race against the insurgency in Iraq showed how remarkably sophisticated their improvised explosive devices (IEDs) have become in terms of triggers. I can easily imagine a bomb designed to explode when a US passport comes within RFID scanning range, and passport pouches made of copper mesh, Faraday cages of sorts, seem eminently sensible.

  2. There’s a generational shift. We’ve got data that shows that under-25s are signficantly less worried about the security of mobile payments than their older counterparts.

    Same goes for smartphone users – definitely less worried than the population as a whole. In that case, it’s a familiarity issue.

    It’s still a problem: even the most enthusiastic are more worried about the security of both contactless and mobile payments than they are about conventional payment methods, but for me it’s just a reflection of the novelty of the technology.

    As with online banking, if people see compelling reasons for adopting new tech, they’ll overcome those security fears pretty rapidly.

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