Pros and Cons of Mobile Payments (2024)

FAQs

What are the pros and cons of mobile payments? ›

Mobile payments can be convenient, fast and secure. They can, however, be expensive and still vulnerable to issues with technology. In particular, if there are any issues with the host phone, mobile payments will be unable to work at all.

Cons of Mobile Payments:

Users need to be cautious and keep their devices secure. 2. Dependency on Technology: Mobile payments rely on technology, and issues such as network outages, battery failures, or software glitches can disrupt the payment process.

When using mobile payments, credit cards are encrypted by the apps and locked thanks to the device's security features. This makes credit card fraud less likely to occur. In order to access mobile payments and the mobile wallet, customers have to unlock their devices using their set security features.

And it might make spending money a little too easy for some people. In a recent paper based on data from a Chinese bank, researchers found that customers charged 9.4% more on average to their credit cards, through both online and in-person transactions, after they adopted a mobile payment method than they had before.

Mobile payments can be fast, easy to use, and require no physical contact, making them an attractive option for customers who want to make quick and hassle-free purchases.

Identity theft is the most popular type of fraud associated with mobile payments. Criminals can effortlessly make purchases and access personal information on a lost or stolen smartphone, often without the consumer's knowledge.

Mobile payments mostly use biometric identification, i.e. facial recognition or fingerprint, which makes it a very safe way to pay. In this case, no one but you can access the payment application.

Usually, mobile payment apps are safe compared to other payment methods. Most of that safety comes down to the tokenization mentioned in the previous section. Not only are these tokens different from your card number, but they are also encrypted and unique for each transaction.

The customer holds their device close to the NFC-enabled POS terminal, approximately within two inches and this initiates the transaction. Both devices use RFID technology (NFC is a subset of this technology) to pass encrypted information back and forth to process the payment, which happens within a matter of seconds.

What is a mobile payment? ›

What Is a Mobile Payment? A mobile payment is a money payment made for a product or service through a portable electronic device such as a tablet or cell phone. Mobile payment technology can also be used to send money to friends or family members, such as with the applications PayPal and Venmo.

The bottom line. Digital wallets can be even safer and more secure to use than plastic credit cards, cash, checks and other forms of physical payment.

It can be a good way to borrow money to spread the cost of major purchases and comes with section 75 protection. But if you only make minimum payments or run up a bill you can't pay back they can be costly, making it easier to spend more than you can afford and could lead to debt.