Virtual wallets: Are they safe?

Local 6 puts LoopPay to test

Local 6 looks into virtual wallets.
Local 6 looks into virtual wallets.

ORLANDO, Fla. – Swiping your card to pay for a transaction could be a thing of the past.

[WEB EXTRA:  Local 6 reporter Louis Bolden details Looppay]

Several virtual wallets are on the market, allowing you to use your phone to pay.  Apple Pay, Google Wallet and Soft Card all offer similar features, but in a Consumer Reports review, it was LoopPay that came out on top.

Virtual wallets store all of your cards -- debit, credit and gift -- on your phone.

You can then open the app, place your phone over a card reader and, with one click, make a purchase.

Local 6 tried it at a local convenience store and encountered no problems.  The owner said he had never seen it before and the transaction was effortless.

"Just like a regular card, it worked," Bob Sidhu said.

It also functioned properly at a vending machine on the UCF campus that accepts cards.

Here's how it works.

When you swipe a card, the reader collects information from the magnetic strip on the back of the card. 

LoopPay transmits the same information wirelessly by placing the device close to the card reader.  You can also remove the LoopPay card from the case to hand to a server or clerk, which is what Local 6 did at a College Park restaurant.

Local 6 told the owner how to hold the card over the reader and then we pressed the button on the card.

"First time I've ever seen someone use one of these. It's  excellent," owner Greg Granda said.
But is it safe?

"With enough time and effort you can probably find a vulnerability," said Gaelan Adams, who trains the University of Central Florida's Collegiate Cyber Defense Club, the 2014 national champs in cyber defense. 

"You're not anymore likely to be hacked," said Adams, comparing the use of a virtual wallet opposed to an actual card.

Adams says no system is hack-proof, but he believes the safety features that LoopPay and other virtual wallets currently on the market have, make them relatively secure.
Other experts, however, say beware of others that may come down the road.

"Some technologies will come out and be very secure from the beginning and may not suffer catastrophic attacks.  Others will come out without having been tested very much," said Patrick Nielsen, senior security researcher with Kaspersky Labs.