Pros and Cons of Mobile Payments (2024)

FAQs

What are mobile payment advantages and disadvantages? ›

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.

Security concerns, limited insurance coverage, transaction errors, privacy issues, and accessibility limitations are all valid reasons why you should exercise caution when using payment apps as a primary method of storing your money.

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.

They are more convenient than carrying cash or cards. They are faster than traditional methods like point-of-sale terminals or cheques. They are more secure than cash, as they can be PIN-protected and use tokenization.

Digital payments have a negative impact on the spending habits of young people. They feel greater strain when using electronic payments compared to using currency . This strain may be due to a lack of familiarity with the technology embedded in digital payments.

Identity theft and compromised personal information are potential dangers in a cashless economy, but privacy might be compromised in other ways too. When you pay digitally, you always leave a digital footprint, and this footprint is easily monitored by financial institutions.

Some challenges mobile payment systems face include a lack of interoperability between different platforms, potential network issues impacting user experience, security threats from hacking and data breaches, the need for customer education, and efforts required to onboard small merchants.

Risks of mobile banking

The 2021 Nokia Threat Intelligence Report indicated that 50% of banking malware is targeted toward Android users, because Androids run on a fully open-source operating system. Cyberattacks triggered by hackers, unexpected glitches, and user mistakes can all undermine an app's security.

At the first level, each transaction made using a digital wallet is protected through a technology called tokenization. This process encodes your debit and credit card details so the numbers are never shared with a merchant. So if a retailer gets hacked, your credit or debit card number won't be compromised.

Digital payments reduce the risk of theft and counterfeit money. These are two significant problems linked to cash, which is reduced by its digital counterpart. Online, financial transactions such as payments can be easily identified.