Recently, some additional features and functionality have been added to mobile phones. With these additional applications and services, you can use your mobile phone as a Credit Card. Mobile phone based transaction are believed as more secure than traditional credit card based transaction, and, they are as easy as sending a SMS.
Credit card based transactions were risky enough since Key-loggers, Phishers and fraudsters were active as never before and they are harming innocent consumers, merchants and banking companies millions of dollars every year, and this figure is kept increasing. Now, thanks to your mobile phone, with an additional 2nd factor authentication security, your transaction will be more secure and with a little care, any online or offline credit card fraud can be completely ruled out. Presently there are two kinds of technique used in mobile phones for secure transaction - SMS based PayMate and Mobile Application based MChek.
PayMate: Secured transaction with SMS
PayMate is SMS based service that can transform your mobile phone a secure credit card. The services offered by PayMate is very little as of now, but they say that many more services will be included in PayMate in near future. Using PayMate is easy enough. If you have CitiBank credit card, then you can register for PayMate by sending a SMS PayMate to 2484. You will then be called back and your mobile phone will be registered with your consent. When you want to pay a merchant registered with PayMate, the merchant will send you a SMS to your registered mobile phone with a random generated alpha code. You need to reply this SMS with a PIN number (secret 4 digit password) and you are done. Since all this process happen automatically without human interaction, and through your registered mobile phone only, it is pretty secure.
Presently, you can not pay more than 5 thousand Rupees per transaction or more than 10 thousand Rupees per 24 hours through PayMate, there fore, you can use PayMate only for small and petty purchases. This limitation will certainly hinder its gaining popularity. And unless this limitation is lifted, PayMate will have limited use.
MChek : Your mobile is your credit card
MChek can very well replace your credit card and very effectively, very securely. But MChek can only be used in certain high end mobile phones where additional mobile applications can be installed. If services like MChek will gain ground then in near future, all mobile phones may have at least one such functionality. MChek also provide you 2nd factor authentication, but, still, attack of mobile virus can not be ruled out - they can breach this security.
Using MChek is also very easy. You need to register your mobile phone with your banker who also support MChek. You also need to install MChek mobile application in your mobile. Now where ever you need to pay through credit card whether Online or to a merchant's establishment, start MChek in your mobile and supply the randomly generated PassCode by your MChek mobile application as a credit card number. For Every transaction, there is a unique number generated by your mobile phone's MChek application that too after supplying a password by you, the procedure seems perfect and secure enough. Even if you lost your mobile phone, your mobile's MChek will remain useless unless it is supplied with a 4 digit unique password that no one knows except you.
MChek is not for basic entry level phones since mobile applications can not be installed on them. Therefore, its popularity will be limited to a great extent. Further, limited numbers of banker/merchants have adopted this and unless a handful banker/merchant allow you to pay through this channel, use of MChek is further limited and hence you can not through your credit card right away! Perhaps, you need to wait a little more to fully replace your credit card with your mobile phone.
Update : (Jan-19, 2007)
According to mChek, here are some clarifications:
1. mChek works on ALL phones - including the Nokia 1100!
2. mChek requires NO software on your client - no SIM card replacement or no JAVA application to be downloaded.
3. mChek works with any and all Visa/Mastercard credit cards issued by an Indian bank.
4. You do NOT need to contact your bank at all - you simply sign up from your phone or from our website in 30 seconds and start transacting.
5. Your mChekPIN is never saved in the clear on your handset.