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Contactless payments rise opportunists follow

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MADISON, Wis. (2/7/11)--Some observers believe 2011 is the year contactless mobile payments finally take off in the U.S. Parallel with that transition, the growth of credit card sales could begin to slide in the next few year, reported (Jan. 24). Pay-by-phone sales will grow from $16 billion in 2010 to $46 billion this year and $214 billion in 2015, according to the research firm Aite Group (Jan. 11). Visa, MasterCard, and megabanks are testing contactless mobile payments. And AT&T, T-Mobile, and Verizon have joined with Discover and Barclays to form a mobile application group called Isis. While mobile applications such as tap-and-go and bumping phones to exchange funds will grow steadily, especially among younger consumers, it will take a long time to change consumer habits away from using plastic cards. Meanwhile, fake mobile applications already have been written to compromise banking information stored on iPhones, Androids, and other mobile devices, reported (Jan. 10) . Some applications contain malicious code that tries to compromise banking information stored on the devices to commit bank and/or credit card fraud. Jim Hanson, vice president for the Credit Union National Association’s center for personal finance, said, “It’s a cliché that new technology spawns new fraud--or at least new variations on old scams.” Consumers will have to be ever more vigilant in protecting their financial information, he said. Consumer Reports last fall observed that the organization “has not seen broad examples of consumer fraud from mobile payments, but there is a great deal of opportunity for consumer exploitation as mobile payments gain momentum.” The message for consumers: Be cautious about downloading phone apps without understanding their source. Stick with mobile tools from trusted providers, such as your credit union. And for more information, read “Keep Passwords Strong, Secret, and Safe” in Home & Family Finance Resource Center.