How Can We Ditch Our Wallets for Our Electronic Payment Future in the Age of Hacking?

Last week, I was sitting on the Starbucks patio, sipping on a Frappachino, I watched a car pull up into the drive-through, and the gentleman took their smart phone and waved it over a smart phone reader which deducted the cost of his coffee from his Starbucks card which was inside of his smart phone as an app.

That was a pretty cool trick, it just goes to show you that in the future your smart phone will be an all-in-one device, and will also serve as your credit card, and your customer loyalty card at the grocery store, and all the other businesses that you shop that. There’s only one problem with all of this, and that is the computer security of your smart phone, and the fact that the hackers can break-in.

There are so many components to all this, you have your 4G wireless company, the maker of the smart phone, and all the software programmers to create the apps. Therefore there are too many chances for gaps in security, and unless these transactions are 100% secure, someone can break-in to your phone, and therefore they’ll have access to your bank account as well.

On July 7, 2011 Google officially announced the end of the of the wallet, which shouldn’t be too surprising considering all the partnerships being announced between smart phone manufacturers, cell phone companies, and banks. On May 2011 there as an interesting piece in a Guardian article titled; “Google Wallet: A Big Deal or Another Buzz? Google is right – replacing credit cards with smarphones is a great idea, but will it work?” by Jean-Louis Gassee.

There was an interesting article by Adam Hoffman of (Electronic Receivables Department at CitiGroup) in Global Finance in June of 2011 which was extremely interesting as he was discussing the future of electronic payments. The article was titled “What’s Next in the World of e-Bills and e-Payments,” and he reminded the readers of the incredible future these technologies will have and what that means to changes in money flow.

This is quite incredible stuff, and these new technologies are totally leading-edge, but we’ve already seen the challenges and security holes in nearly all of the smart phones and their operating systems. How can consumers feel safe, and until they do how can the industry including the banking industry, credit card sector, and the makers of these devices convince the public that it’s okay and safe to use electronic payments in the age of hacking? Indeed I hope you will please consider all this and think on it.

Auto Insurance Electronic Payment Policy Retention

Many auto insurance companies have seen the benefits of having their clients on automatic payments that are taking electronically from the insured bank account monthly. The policy retention of the clients that have electronic funds transfer for installments is more than double that of the direct bill clients.

Having significantly higher policy retention benefits the insurance company in many ways. There is less paperwork that needs to be done for clients that are cancelled for non-payment, there are less midterm cancellations, and more of the client’s policies mature to receive the loyalty discounts that are offered.

When an insurance company offers a loyalty discount it is less likely that the insured will be able to find a more competitive rate with another carrier. In California, if the insured were to get quoted from new insurance companies the new companies will not be able to offer a discounted rate because the client has had continuous coverage.

In return the insurance companies offer these electronic payments to client multiple times. Some insurance carriers offer this to the client on almost every communication. The companies will also offer lower billing fees to these clients that elect to have their monthly payment taken from their checking account.

There has been some debate in the industry about the level of responsibility of the clients that choose EFT monthly installments. Some say that these clients are more financially responsible and would have the higher retention regardless of the policy billing. Either way, the insured will be able to save each month on the billing fees associated with the policies. In some cases the saving could be as high as $10 per month.

Should We Be Concerned When Using Electronic Payment Systems?

The world now operates largely through the World Wide Web. New internet based companies are springing up all the time to offer consumers products for less and without the hassle of having to pop down to the shops to pick the item up.

All of these websites need to have some form of electronic payment system to allow the customers to securely pay their money to the company in question and possibly the biggest single issue with shopping on the internet is the threat of your bank details being hacked by some online virus or tracker.

Obviously there will always be people that will attempt to hack peoples bank details, just like there will always be people who attempt to rob banks or perform muggings. But thankfully there are a number of individuals that have the task of constantly coming up with new ways to make the electronic payment systems more secure.

There have been several variations of the online electronic payment system, but the standard version that most people use today is PayPal. This service works as a go between for the client and the company selling products. The money is transferred securely to PayPal who then hold the money before passing it on to the company. Because of this there is no exchanging of bank details between the two individuals. All the bank details are stored on PayPal’s secure servers.

Other variations of the electronic payment system involve using a series of security number and passwords. For instance VISA’s latest version of their online electronic payment system includes using the three digit security code from the back of the card and also uses a specified password that the owner sets to verify that the card hasn’t been stolen.

Obviously you will never really eliminate all card crime, because as quickly as these companies can manufacturer new methods of keeping us all safe, someone is coming up with a way to crack the code and give the advantage back to the thieves.

If you really want to make sure that you stay safe when ordering your products online, then there are a number of rules that you should follow. Firstly, online shop on sites that you know are genuine and you trust, secondly ensure that you machine is updated with the latest security patches from your software manufacturer, and thirdly ensure when purchasing that the web address starts with https. As long as you follow these steps you should have a happy and safe online purchasing experience.