Guide to mobile phone payments

Not so long ago, a mobile phone was for making calls, sending texts and not much more. However, the rise of the smartphone has changed all that, opening up many new ways to make payments and do your banking on the move.

Lots of people already use their mobile to pay for things by card, access internet banking and even to pay or donate by text. This guide explains ‘how to’, as well as offering advice on how to stay safe. It also looks into the not-too-distant future: could contactless technology and account-to-account payments on phones become available to everyone?

Is it safe?
Yes, you get the same consumer protection when banking or making payments using your mobile as you would using any other method and there are lots of simple steps you can take to protect yourself.

On a general level, you should always be aware of your surroundings when using your mobile phone and it’s a good idea to protect sensitive personal and financial information by setting up a passcode to lock your phone when you’re not using it. More detailed security tips for different types of mobile payments are below.

Internet banking on your smartphone
If you can access the internet on your phone, you should be able to access internet banking. The latest research shows you would be far from alone – almost fourteen million Britons used their mobile to access the internet in 2011 and with 25 million regular users of internet banking in the UK, mobile internet banking looks set to become a growth area.

The way you access your account on your smartphones will depend on your bank (or card provider). Some banks have developed ‘apps’ for smartphones (like the iPhone, Android, or Blackberry), while others have created specially adapted versions of their websites that make them easier and quicker to view on the small screen of a phone.

Contact your bank’s internet banking helpline if you’re not sure which applies to you.

Although some banks apply restrictions to how much you can do using mobile internet banking, most banks will  let you check your balance, and make payments or update your personal details. Click here for a more general guide to internet banking.

Internet banking on your mobile Security tips

  • Change any passcodes/ PINs that have been set up as part of the phone’s default settings.
  • Don’t keep PINs, passwords or security information stored on your phone.
  • If you use a smartphone ‘app’ to log-in to internet banking, only ever use the official app provided by your bank or issuer. If in doubt, contact your bank’s helpdesk to check.
  • If you’re using an internet browser, look for a locked padlock or unbroken key symbol indicating that the site is secure. Also make sure that the web address changes from http to https.
  • Once you have finished online banking make sure you log out of the site on your phone. If you use an app, ensure you have logged out and that the app has closed down.
  • Never go to a website from a link in an email. It could be a fraudster who is trying to get you to login to a fake bank website to steal your details.
  • Install antivirus software on your smartphone. Visit the ‘iTunes Store’, ‘Android Market’ or BlackBerry World to download an ‘app’. Well-known companies include Norton and McAfee and some versions are available for free.

Remember: if you are an innocent victim of fraud you will not suffer any financial loss.

Using your mobile to pay by card

By phone:
You can pay for goods by card over the phone using your mobile in exactly the same way as you would when using a landline.

By internet:
If you have an internet-enabled smartphone, you can shop online in exactly the same way as you would on a computer. When making this type of card payment (sometimes known as a ‘card-not-present’ transaction) You will be asked to provide the card’s billing address as well as the card details. You will never be asked for your card’s PIN.

It’s a good idea to register your cards and set up an online shopping password with MasterCard SecureCode or Verified by Visa. The personal password you set up will be the same whether you’re shopping on your computer or your mobile.

For these types of transactions, there are security checks built into the process to help protect you from fraud. In the unlikely event you become a victim of fraud, you won’t lose out financially as long as you haven’t acted negligently.

By app:
Some retailers, particularly restaurants, have apps to enable you to pay your bill or buy your coffee more quickly. These involve downloading an app, probably from the retailer’s website, which enable you to pay your bill just by entering your card details and the reference number on your receipt onto the app on your phone, or by using your phone in place of your card to pay for a coffee simply by holding up the barcode on your phone’s app to be read at retailer’s point-of-sale.

Paying a friend or individual:
Although you can use your mobile internet banking website or app to pay an individual, Barclays have just launched an app that allows you to transfer money just using the recipient’s mobile number, without having to know their account details. This is great if you’re splitting a bill or if the recipient can’t or won’t give you their account details. The Payments Council is managing a project that will enable all banks to offer a similar service to customers.

Security tips

  • Don’t keep your card details stored on your phone.
  • Be aware of your surroundings – don’t loudly read out your details in a public environment.
  • Be wary of shoulder surfers (people looking over your shoulder when entering details on a phone or tablet).
  • Never tell anyone your card’s PIN, or enter it in a website or email.

Check your statements regularly (a lot easier with internet banking) and keep an eye out for transactions you don’t recognise.  Report any suspicious transactions to your bank immediately.

Paying, or donating, by text
More and more businesses are starting to accept some kind of payments by mobile and this is likely to increase over time. Many local authorities, train companies, and private car park operators have started accepting payment by SMS for small value services such as parking. The exact way in which this works depends on the organisation you are dealing with. However, for example, to pay the congestion charge in London, you need to first create an account with Transport for London and register your card details.

Another way of paying by text is via a premium rate text message, which is charged to your mobile phone bill. This has become a popular way of donating to charity, with, for example, Disaster Emergency Committee appeals. Click here for an in-depth guide on ways to donate to charity.

Paying by text is also common for things like buying ringtones, games or entering competitions. It’s a good idea to read the small print before agreeing to pay for something with a premium rate text, as it can involve signing up for a subscription.

The future
The Payments Council is currently working  on a project to enable money to be moved from one account to another quickly and securely. You’ll be able to send money to someone using just their phone number rather than their account number and sort code. You won’t need to log onto your online bank account or use a card, and depending on your bank, you may not need a smart phone. Your bank will provide details of the service they are planning to offer and how you can register to use the service over time.

Contactless payments on your mobile
Contactless Indicator logoThere are now at least 19 million contactless credit and debit cards in the UK letting people pay for small value items (under £15) without the need for a PIN or a signature, simply by holding the card up to a reader. The same technology (known as near field communication, or NFC) is now being incorporated intosmartphones.

Integrating NFC into a mobile phone means that you don’t have to use a physical card at all. Instead, you simply hold your phone to the contactless reader in a shop, which will then automatically charge the money to your account.

At the moment, contactless mobile payments are only available to customers of Orange and Barclaycard on one particular model of phone, although it’s predicted that many more companies will start to offer it soon.

Contactless security is built on the same secure technology as chip and PIN and you can only make a few contactless transactions before you are prompted to give your PIN at the terminal. If someone used your phone without your consent to make a payment you would have the same legal protection as any other cardholder to get your money back.

How do I find out more?
The best place to start is on your bank’s website. Take a look at our internet banking guide for some links to banks.

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