As cellphone uses grow, so do security options

Banks and credit card agencies are gearing up security for financial transactions over cellphones and other handheld devices.

Aware that a growing number of consumers - especially those under 35 - are comfortable using cellphones as digital wallets, leading financial institutions are concocting mobile-security options to protect them from hackers and cyberthieves.

"Mobile banking is where online banking was a decade ago. It's starting to take off," says Richard Crone, a Silicon Valley consultant who follows electronic-payment services. "Cellphones are more ubiquitous than PCs - across ages, incomes, geography - and have become payment instruments. That makes them targets." A sampling of what's being offered:

•Wachovia's 5.9 million customers now have the option of using a cellphone or personal digital assistant to check accounts and transfer funds. The mobile service requires an encrypted - or digitally scrambled - user name and password, says Jason Ward, director of interactive design at Wachovia.

•Early next year, Citibank will test a program to let consumers check balances, pay bills, transfer funds and search for a nearby ATM from cellphones. Citi Mobile requires an access code and operates on an encrypted system. The service can be immediately disabled if a cellphone is lost or stolen.

•Under a system being tested by Visa USA, mobile-device users need to enter a password to perform financial tasks. If a cellphone is lost, users can immediately disable all payment applications on it from another phone or PC.

•MasterCard Worldwide is offering mobile authentication, which lets consumers shop or bank with specific credit cards and debit cards over a cellphone. They are required to enter a PIN, which assigns a one-time-only password for each transaction.

Financial institutions are building digital defenses as mobile viruses rise.

They have increased from 34 in 2004 to 162 in 2006, says security firm SMobile Systems. SMobile expects 600 to 700 new viruses in 2007.

The figures pale in comparison with overall viruses - 57,125 have been discovered over the past 12 months, according to security-software maker McAfee. But they signify a new cybersecurity battlefield, tech analysts say.

That could be unsettling news for an estimated 30 million North Americans who use their cellphones to bank or shop, according to market researcher TowerGroup.

But Michael Carpenter, 20, who is testing a mobile-banking service at BancorpSouth in Mississippi, isn't worried. He figures it's easier - and safer - to check accounts and transfer funds from his cellphone than a computer.

"It's fast and convenient, and I'm accustomed to using my cellphone for a lot of things."