Canadian Banks Rushing To Offer Virtual Wallets

silentbrad writes with this quote from the Globe and Mail:"Canada's big banks are preparing to launch 'virtual wallets' as early as this fall that will allow consumers to digitally consolidate their credit and debit cards from any financial institution, and use them to make purchases online and through their cellphones at cash registers. It is being called the biggest change to the way consumers pay for goods in Canada in decades, and for the banks moving quickly into this space, the strategy is about keeping ownership of the vast and potentially lucrative stores of data that are involved in transactions. ... The majority of the banking sector is expected to follow suit in the next year or so, with each financial institution relying on the concept of 'aliases,' where a password lets consumers access their payment cards, but protects personal information from being passed to the merchant. ... Retailers can use the information contained in transactions, stripped of details that violate privacy laws, to tailor offerings or promotions to consumers. And the banks figure they can build a new business from that new world. Location data on phones can help neighborhood stores connect with customers in the area, while transaction data online can give insight into consumer habits and tastes."

Comments

As I pat my virtual pocket to check

[paiute]

This is great news. Now I no longer have to wait to lose my physical wallet to go through the agony of canceling and replacing credit cards. It can be lost more efficiently in the cloud.

Re:As I pat my virtual pocket to check

[IpSo_]

Does it matter if its compromised by one person or 10,000? The one person who steals your wallet from your car or off the beach when you're not looking can just as easily provide the information to anyone else anyways.

Lets compare the process in each scenario:

Physical Wallet:
1. Thief steals wallet from car.
2. Thief opens wallet, takes credit cards and starts making purchases at physical stores and online.

Virtual Wallet in Phone:
1. Thief steals phone from car.
2. Thief must prevent any radio signal from reaching the phone to prevent a remote wipe.
3. Thief takes the phone home and starts the "hacking" process to gain access first to the phone (password lock)
4. Thief then must gain access to the presumably encrypted virtual wallet app.

If the encryption is done properly, step 4 would be prohibitively expensive and easily buy the 2-24hours it would take to realize your phone is gone and contact your credit card company.

Not only that, but once enough people are using the virtual wallet, I would imagine they would be able to easily switch to using bluetooth or similar protocol that uses some sort of SSL encryption with pre-exchanged keys to prevent any man-in-the-middle attacks at the POS terminal.

Re:As I pat my virtual pocket to check

[MachDelta]

The problem with them is that there's no way to turn them off. At least on my cell i can disable NFC and password (and track) the device. With cards you either have to permanently disable them or get a shielded wallet. I opted for the shielded wallet, but most people don't know why they would need one. Even my mom, who's been in the banking industry for 25 years, was surprised that my phone could pick up her CC through her purse. If people are so ignorant of the dangers that the whole act seems like magic, they're easy to take advantage of.

It's all about selling customer data

[Anonymous Coward]

FTFA:

Retailers can use the information contained in transactions, stripped of details that violate privacy laws, to tailor offerings or promotions to consumers. And the banks figure they can build a new business from that new world. Location data on phones can help neighbourhood stores connect with customers in the area, while transaction data online can give insight into consumer habits and tastes.

The title of the article should read:

"Canadian banks rushing to offer your private buying history to the highest bidder"

What?

[TheSpoom]

Did anyone else read the entire summary and still have no idea WTF it's talking about? Something to do with aliasing personal information to merchants... so they can target advertising... when the merchant has all the customer's personal data out of necessity anyway...?

Canadians already primarily use a card system called Interac to make most purchases; granted, it's been a while since I lived in Canada but even three years ago it was very rare for me to make a cash purchase.

Reading TFA it seems like it's talking about cell phone wireless payments, and banks selling your demographic information to retailers. Frankly, if my bank did that, I'd opt out of it immediately, and potentially change banks if they didn't allow the opt-out. This suggests to me that within five years there will be no bank that will allow opting-out unless it's protected by law.