Is mobile commerce safe?

Canadians are increasingly using their smartphones for mobile commerce -- shopping online, transferring money to a friend instead of using cash and checking their account balances -- all using downloadable applications.

Consumers worldwide are expected to spend $119 billion by 2015 through their mobile phones, ABI Research found.

Approximately 9% of Canadians already have mobile banking accounts and other 20% plan to start paying their bills from their device in the next year, according to Boston-based Mercatus LLC.

And according to Internet payment company PayPal, the number of Canadians who have a mobile banking account is expected to double in the next year.

The Canadian Imperial Bank of Commerce was the first of Canada’s big six banks to truly embrace the technology with the launch of their free mobile banking app for the iPhone last month.

The CIBC app allows users to check account balances, transfer funds, pay bills and send Interac email money transfers.

The competition isn’t far behind either, with Royal Bank of Canada, Scotiabank and TD Canada Trust already offering text alerts and apps to find the nearest branch.

This month, PayPal will push the limits of e-commerce further still with the launch of its Send Money iPhone app.

Simply “bump” two iPhones together and voila! You’ve just split the cost of a cab ride with your friend.

But is this next generation of mobile commerce safe?

PayPal says so. After all, it’s not a huge leap from other types of online shopping or banking.

A PayPal account is used every 1.2 seconds to make a purchase and 1,000 times every 22 minutes a Canadian receives a payment via system, the company says.

With PayPal’s “bump” app, personal and financial information is never stored on the device so it can’t be easily stolen like cash or a card.

IDC Canada senior analyst Rob Burbach says banks today guarantee their mobile apps the same way their do their online accounts but it could become more challenging as technology progresses.

It’s been a constant cat-and-mouse game between engineers and hackers when it comes to cyber security, he said. But for the time being banks seem to be winning.

“Canadians continue to use online banking in spite of viruses and threats of cyber attacks,” Burbach said. March is fraud prevention month and many banks have been promoting ways to better protect financial information, like changing PIN numbers every few months.

The digital wallets of the future – which will effortlessly connect Canadians with retailers, payment processors and numerous financial institutions simultaneously -- are at least three to five years down the line, Burbach estimates.

That’s because completely integrated payment systems change the security equation.

“Everyone has to be working together to ensure Canadians are protected,” he said.