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Mobile payment systems: A disaster waiting to happen

The apps may be well thought out, but until security improves in the underlying security of the devices they run on, look out

By Ira Winkler
June 1, 2011 09:29 AM ET

Computerworld - When I saw the Computerworld article about Square touting how it is going to replace cash registers with iPads, I was dismayed that there was no discussion of security. And Square's app isn't the only payment app that makes me anxious. While I admit that I would find applications such as Square Register and Google Wallet useful, turning mobile devices into credit cards or credit processing systems is foolish at this time.

OK, some of these payment applications are pretty cool. Square Register could be really convenient for small-business people, making accepting credit card payments practical for businesses that make few transactions. For some small companies, that could be a competitive edge. Likewise, applications like Google Wallet that let you pay for things by having your smartphone communicate with a terminal consolidate another function onto a device that people always have with them.

But cool only takes you so far.

First, let's take a look at Google Wallet, which to me represents the greatest chance for disaster. Google touts three primary security features: a PIN to use when making a purchase, a special chip for storing your credit card on your phone and PayPass technology to ensure that the credit card number is encrypted when being transmitted to the payment devices.

All of that probably sounds great to the layperson. But it is great only if the phone itself is fundamentally secure, and that this is far from the truth. We have already seen malicious Android applications, and it is widely acknowledged that Google doesn't adequately vet Android applications from a security perspective. A smartphone's operating system controls the exchange of data between programs, input/output devices and all of the other hardware components. If malicious software ends up on your phone, it can easily capture your PIN every time you enter it to pay for something. Even if you assume that the credit card is completely secure when it is on the special chip, it is still vulnerable when you are entering the data and every time you access the data when you make a payment. And before the PayPass technology can encrypt and transmit the data, the data must make its way through the operating system.

In security terms, this is like putting an airbag on a motorcycle. If the motorcycle crashes, it is possible that the airbag might help, but there are so many other things that could go wrong.

It's true that PCs and other payment systems have been subjected to the sorts of attacks that I am concerned about in regards to cell phones. And, yes, there have also been attacks against point-of-sale systems. Nonetheless, there is a complete void when it comes to security tools and awareness for cell phones. All you need is a malicious Angry Birds, and it will make the Heartland data breach seem like a footnote.



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