Anyone who has tried to split a restaurant check, pay the rent, or send money to their kids in college can appreciate the ease and swiftness of mobile payment apps. The ability to instantaneously transfer major amounts or even minute ones with the touch of a button is nothing short of revolutionary. An estimated 79 million U.S. adults will use mobile ‘peer-to-peer’ (P2P) payments this year. And — contrary to conventional wisdom — it isn’t only millennials. Every age group is driving adoption of these services.
But at a time when every day brings news of alarming hacks and breaches, how well such services safeguard our personal data and financial security is a foremost concern. That concern extends well beyond digital payment apps. For too long, consumers have lacked an understanding of whether and how much today’s connected products and services are able to protect them and their data. Without that knowledge, consumers cannot make smart decisions about which apps to trust.
In the absence of baseline standards put in place by regulators or policymakers, accountability is difficult, though not impossible. We at Consumer Reports, where I am CEO, have taken a first step by releasing a new type of rating for P2P payment services. It allows consumers to compare the services based on how responsibly they handle user data. We analyzed several key areas to determine how well each service safeguards personal information, including its data privacy and security, along with the quality of customer support and other factors like payment authentication, broad access, fee disclosure, arbitration, and insured deposits. These factors were then converted into numerical scores, which were weighted and combined into an overall score using Consumer Reports’ standard scoring techniques.
On that basis, Apple Pay is the standout, because it minimizes how much information it collects, and because the company does not sell users’ personal information to third parties. On the important question of security, Apple Pay automatically requires users to confirm every payment with a fingerprint or PIN. The full set of ratings is here.
So many of the products we rely on, from fitness trackers and baby monitors to refrigerators and TVs, contain ‘smart’ components that collect data and render them hackable. This makes it imperative that we have a minimum of foundational standards in place to hold companies accountable and help people make informed choices. After all, our choices ultimately shape the marketplace by rewarding companies that put our needs first — and forces bad actors to step up if they want to compete.
As people gain more awareness about the privacy and security of products and services and what to expect, we believe companies should and will compete on the quality, reliability, and security of their data practices. That starts with collecting and sharing only the data that is absolutely necessary to deliver their services, being transparent about their data practices, making their default settings the most secure possible, and making it easy for users to get help if they experience fraud or errors.
Innovation will undoubtedly continue to accelerate, and consumers must demand responsible digital practices. The more light we can shine on opaque and hard to understand factors like privacy and security, the greater ability we will all have to make informed choices in a world of increasingly digital products, services, and apps. Unless we understand the risks that come along with these breakthroughs, we cannot claim that the well-being of people is what drives technological progress.
Marta Tellado is president and CEO of Consumer Reports.