Vendors and merchants traditionally unable to accept credit cards due to logistics or other reasons are finding it hard to not accept them with the emergence of several new companies offering credit card payments directly on a smartphone.
These companies, which all involve a card reader that plugs in to various mobile phones, also use an app to complete the credit card payments. This gives vendors like mobile food trucks, smaller businesses and retailers without a traditional brick-and-mortar store an opportunity to conveniently process credit cards wherever and whenever they’re selling.
However, with all the benefits come many security concerns. Unlike traditional card readers, smartphones can be house dangerous software that could possibly allow hackers to mine for information, including credit card and financial information.
The companies selling the new smartphone card readers answer those concerns with encryption software and the fact that no cardholder information will ever be stored on the phone itself, but it’s ultimately up to consumers and retailers to decide for themselves if the technology is worth that risk.
Source: BusinessWeek, January 2011