Deb Shinder discusses some ways to protect yourself when you conduct financial transactions from your smartphone.
‘Tis the season for shopping ‘til we drop, year-end bonuses (we hope), shifting funds from one account to another, last-minute maneuvers to reduce our 2011 tax bills, and a host of other money-related activities. And today, for many of us, our smartphones play an important role in our financial lives.
Constant connectivity can make it much more convenient to perform many of the finance tasks that we once had to do in person, over the phone, or at our desktop computers. Whether you have money coming in, going out, or just moving around, there's probably an app for that. But it's important to remember that sometimes convenience comes with a cost — security.
So, let's talk about the steps we need to take to protect ourselves when we entrust our money to any device that's connected to the Internet, and we'll also talk a little about the security implications of conducting "money business" from our phones.
According to some analysts, by 2015, over 1.1 billion customers will do their banking with their smartphones. Most of the major banks offer apps for the popular smartphone platforms. You can view your checking and savings account balances, manage your credit card accounts, pay your loans, transfer funds from one of your accounts to another, and more. If you need to deposit a check to your account, you may even be able to take a photo of it with your smartphone's camera and upload the image to your bank.
Some banks don't offer dedicated apps, but they may provide mobile web sites that you can use to do your banking. For example, Citibank has the Citi Mobile® service.
Other banks also offer text-based banking, whereby you can text message a short command to the bank to check your account balances. You enroll the accounts that you want to be able to track, then you can use a number of different commands to get different information sent back to your phone. For example, you might text BAL to see your account balances, STMT to see your credit card statement, and HIST to see your recent transactions.
Online (and offline) shopping
At this time of the year, in particular, we're always looking for the best deals. Getting the best price used to be a time-consuming (and exhausting) process, as we had to rely on newspaper ads or drive from store to store to check prices. PCs and the Internet made it easier, but you had to remember to check all the items you might want to buy before you left home or carry a laptop around with you and hope you could find a Wi-Fi network to connect to.
Smartphones give you the Internet wherever you are, even if you're standing in line in a store. And you don't have to squint at a web browser to do your comparison shopping; you can download apps that are specifically made to do price comparisons and find discounts. All you have to do is take a photo of the item's barcode with your smartphone's camera, and you get a list of its price at various retailers. With some apps, you can even get points for walking in the door of a store, which you can then redeem for gift cards.
There are also a number of shopping list apps that let you create your list on your phone — or on your computer, and it syncs the two. You can add to or cross items off the list in one place, and the change immediately shows up in the other. If someone at home wants you to get something while you're at the store, there's no need to call or send a text message. The person at home simply adds the item to your list (using any computer with a web browser or his/her own smartphone that's running the app), and you'll see it instantly. Many of these apps, such as Grocery IQ and Our Groceries, are designed for grocery shopping, but you can add any kind of item to your list.
Expense accounting and record-keeping
If you're self-employed or you get reimbursed by your employer for business expenses, you need a good way to keep track of those expenditures. No longer do you have to carry a little book around with you. One way to do it is to use the smartphone's camera to take photos of receipts (but keep the paper ones as backups, because you might be asked to produce them if your expenses are questioned).
There are also apps, such as Xpense Tracker for iPhone and Cashbook Expense Tracker for Android, that make it far easier for you to keep track of your expenses, as well as mileage that you drive for business purposes.
Being able to manage your financial business with your phone is great, but what about security? You might think you don't have to worry too much about that because the security of online banking is the bank's or merchant's responsibility.
Do you think that your bank will reimburse you in full if a hacker wipes out your bank balance? You might assume so, but the courts might not agree — especially if it's a business account rather than a personal one. In a case in Maine last summer, a small construction company sued the bank over just such a scenario, and the judge ruled that because the bank followed established guidelines, it had provided adequate security.
Thus, it's very important that you take steps to protect yourself. If you're using a web browser to do online banking or shopping, be sure the sites are secure sites (SSL encrypted). Generally, though, it's better to use a dedicated app if the bank offers one, as they tend to be more secure. However, not all apps are created equal where security is concerned. It depends on how the particular app is written. Some apps store information on the phone, which is not a good thing — and it's even worse if it stores that information in plain text. If information is stored on phone, it should be encrypted.
If you use your phone for financial transactions, be careful which apps you download. Free apps not related to your banking can contain malware that harvests data from your phone, which is yet another reason to make sure your banking apps don't store their data there. For some protection, stick with apps that are well known and from official app stores. However, that doesn't guarantee freedom from malware. Some malware authors are even creating apps that masquerade as official banking apps. When you enter your account information and passwords, they send it to the malware distributor instead of to your bank.
Text messaging is generally not very secure, so even if your financial institution does offer this service, it might be best to access your account info in other ways. You also need to make sure the device you use for financial tasks is generally as secure as it can be. There is security (anti-virus/anti-malware) software available for smartphones, but many of the programs have shown, in testing, to not really catch much malware.
Use of facial recognition, fingerprint ID, or other multifactor authentication increases security, but nothing is foolproof. At the very least, set a password on the device so that it can't be easily accessed by just anyone who picks it up. Basically, you should treat your phone as you would a credit card — don't loan it or lose it. And in case are prone to losing things, you should consider getting a phone that has remote wipe capability. Finally, don't forget to do a factory reset if you trade in your current phone for a new model, before you give it away, turn it in, or toss it into a drawer.
Smartphones make it easier than ever to manage our finances, even when we're on the go, but we need to be smart about how we use them when our life's savings may be at stake.