Every year, more and more people are charged for things they didn’t actually intend to buy. Identity theft is at an all-time high as criminals get smarter and find more ways to defraud credit card companies and their customers. Scams perpetrated by e-mail and via Web sites promise consumers things like quick weight loss or get-rich-quick methods, and once the consumer hands over their credit card information, they are charged for several other products and services they weren’t aware of. Even wireless carriers are blamed for charging for services their customers never even used. If only there were some way to receive an alert of some kind before charges are made, say, a text message that allows you to approve a charge before it’s applied to your credit card. Why banks and wireless carriers haven’t done this yet, I don’t know, but it looks like a couple of online payment start-ups have beaten them to it.
Two companies, Zong and Obopay, are making it easy for people not only to pay for items online, but to protect their credit card and bank accounts. Both companies announced a new feature this week—the ability to link credit or debit card number to cell phone numbers. Customers can add a cell phone number to their account, link it to a particular credit or debit card, and then use just their cell phone number when shopping online. Rather than having to enter all the credit card information—name, address, billing address, card number, card security code—shoppers will be able to enter just one bit of information: their cell phone number.
The companies then diverge a bit in how the payment is authorized and processed. For security, Obopay requires a password be entered along with the cell phone number. Zong’s security method is to send the customer a text message requiring a response for payment verification.
Passwords are always good, but they can be stolen, guessed, or inadvertently disclosed. Web site accounts are frequently hacked, although they’re supposed to be protected by passwords. Just look at all the phishing scams that circulate on Facebook and Twitter on a seemingly weekly basis. The addition of the text message might at first seem like an inconvenient step in the payment process. But requiring a response to confirm a purchase is an added layer of security that would be difficult for a thief to get around. In order to use your credit or debit card without your knowledge, the criminal would need your credit card information and your cell phone, and more than one password if you keep your cell phone locked when it’s not in use.
Right now, it’s mostly online gaming and social networking sites that use Zong, and Obopay is also used by online gaming sites. They’re hoping to expand into other shopping categories, and many more Web sites.
If all you have to do to make a purchase online is enter your cell phone number, you’re probably more likely to buy if you don’t have to actually get your wallet out, fill in numerous information fields, and go through a few Web pages to complete a purchase. Online retailers would be smart to get on board with this simplified buying process.
If companies like Zong and Obopay take off and do begin to expand into other markets, other online payment sites like PayPal could be in trouble. PayPal has been around the longest, and is the most widely used online payment service, but as they’ve increased fees over the years, their level of service hasn’t changed much, leaving them vulnerable to more innovative companies who have something new to offer.
Zong and Obopay have a long way to go before they’ll be able to compete with larger companies like PayPal, but with as quickly as technology moves and changes, they may be able to cover that distance in a relatively short time.
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