Mobile-Money Apps’ Security Flaws Exposed

While the rise in mobile-money services in emerging markets is promising, due to the ability to bring financial services to those who otherwise may not have access, new research shows these apps may also come with major security risks.

According to the research of computer scientists from the University of Florida, major security flaws were found in all but one of the seven mobile-money apps studied from Brazil, India, Indonesia, Thailand and the Philippines, The Wall Street Journal reported yesterday (Aug. 11).

“It was worse than we expected,” Patrick Traynor, a computer science professor and author of the study, told WSJ.

The study, “Mo(bile) Money, Mo(bile) Problems: Analysis of Branchless Banking Applications in the Developing World,” found many of the apps that were analyzed experienced common security weaknesses, such as information exposure, insufficient protection of credentials, weak password requirements and improper certificate verification.

“We had to go back over these vulnerabilities many times to make sure these things were possible,” Traynor said.

In developing countries where the availability of cellphone networks tends to outnumber traditional banking locations and services, mobile money and banking have risen in popularity. The services have developed a reputation of being very secure, especially when compared to carrying around cash, but the new research shows they may actually be leaving users in a more vulnerable state.

“It is our belief that these applications create significant financial dangers for their users,” the authors wrote in the paper.

While enabling people to manage their own finances is important, the security of these programs is paramount since they aim to serve an already vulnerable population.

As smartphones continue to become more popular and cheaper to make, people in developing countries may undoubtedly flock to these mobile-money apps.

One of the study’s authors, Kevin Butler, described the speed in which new players are attempting to take advantage of the market opportunity.

“It’s a gold rush right now with people trying to get their apps out there,” Butler told WSJ.

Unfortunately, the rush is coming with few regulations and standards in place to truly protect users and their sensitive information.

“These systems allow residents of such countries to reap the benefits afforded to modern economies and decrease the physical security risks associated with cash transactions. However, the security of the applications providing these services has not previously been vetted in a comprehensive or public fashion. Given the systemic problems we identify, we argue that dramatic improvements to the security of branchless banking applications are imperative to protect the mission of these systems,” the study concludes.

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