Mobile wallet technology is the future, but is it safe for shoppers?Monday, May 21, 2012 at 10:07:37 AM
There has been a lot of talk in recent months that consumers are ready to begin using the mobile wallet systems currently being tested and rolled out to the general public, but some experts say they can also lead to serious financial problems.
Contactless payments - whether they're made with mobile wallet systems or through smartphone applications pushed by certain companies - are likely to become the next big thing in consumer spending, but some say they will likely lead many borrowers to spend more than they might have otherwise, according to a report from the Hartford Courant. A recent study by MasterCard showed that people who make use of contactless payments with programs linked to their credit cards tend to spend 30 percent more on their accounts than those who used their cards in the traditional way, regardless of their previous spending habits.
And despite the concerns about higher spending, the MasterCard study also showed that as many as 150 million of these devices will be in circulation across the U.S. within the next five years, meaning the number of people who might end up spending more on these accounts than they can afford could be quite high, the report said. Further, many of these mobile wallet programs will also make it easier for merchants to extend special deals to former customers based on previous shopping habits, which might prompt even more spending.
"Shoppers are constantly bombarded with offers from daily deal sites, stores and online retailers," Sheryle McMillan, regional director of education and community relations at Money Management International told the newspaper. "All that personal attention takes real effort to resist."
However, many mobile wallet developers are also building in greater account controls that consumers will be able to tap to make sure they don't spend more than they can afford on the account. This can include more options for tracking spending by category, or overall, as well as the ability to set limits on spending in certain categories.
Consumers who want to save money on their credit card bills every month may want to consider taking the time to review a number of credit card offers to find the best credit cards for them and their unique financial situations. Doing so will help them compare and contrast a number of different options, and better inform their financial decisions going forward.