Mobile payments generally involve three participants: the mobile device, the merchant, and a financial service provider or trusted third party.

That trusted third party, or TTP, is an established, reputable fiduciary entity accepted by all parties to an agreement, deal, or transaction. A TTP authenticates and authorizes users in order to secure a payment transaction, and acts as an impartial intermediary for the settlement of payments and any problems that arise after the transaction has occurred.

There are various mobile payment delivery options. Near Field Communications is a contactless delivery system, involving a chip that is either built into the phone itself, into a card within the phone, or a sticker attached to the phone. There are also new applications that facilitate mobile payments, most of which involve a barcode that the user scans at the register.

The statistics for mobile payment are impressive. The U.S. mobile payment industry encompasses a number of categories, including mobile bill payment, mobile point of sale, m-commerce, and mobile contactless. Mobile bill payment, in which consumers pay bills via mobile phone, currently makes up the bulk of the U.S.’s mobile payment industry. Mobile point of sale, in which a consumer’s phone is used as a point of sale device, accounts for just over 5%, but is expected to grow by 127% in the next five years, to $54 billion in transactions. Mobile contactless is expected to grow 1,077% by 2015. The gross dollar volume of mobile payments overall is expected to grow 68% by 2015.

This is all very exciting, but the Payment Card Industry Standards Council is not yet granting approval to any mobile payment applications. With the explosive growth of the mobile payment industry, they are holding off and waiting to see which technologies rise to the top. This shouldn’t be a concern for mobile phone users, though, since the merchant, rather than the customer, undertakes the bulk of the risk.

Meanwhile, as you increasingly use your phone for mobile payments, be aware that the phone correspondingly increases in value to thieves and hackers. So keep track of your cell phone. You wouldn’t leave your wallet on a bar and walk away, and you shouldn’t do that with your phone, either. And be cautious when visiting websites on your phone’s browser, clicking on links, or responding to text messages.

Robert Siciliano, personal security expert contributor to Just Ask Gemalto, discusses mobile phone spyware on Good Morning America. (Disclosures)

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