The New Pay Phone and What It Knows About You

By SOMINI SENGUPTA

The term pay phone has a new meaning today.

For consumers who wish to ditch their wallets, paying through a mobile phone can be awfully convenient. Those same consumers can also, often unwittingly, give up valuable information about themselves to merchants that want to sell them things.

A new survey by law professors at the University of California, Berkeley, suggests that most Americans are uneasy with the idea that their phones could divulge behavioral and personal information, like phone numbers and in-store browsing habits.

The survey was created by Chris Hoofnagle and Jennifer Urban, who study digital privacy issues, and financed by Nokia, which makes cellphones. The survey posed a variety of questions by phone to 1,200 people nationwide. It had a margin of error of plus or minus 3.4 percentage points.

It found that four out of five of those surveyed “objected to the transfer of their phone number to a store where they purchase goods,” while 15 percent said they would “probably allow” transmission of that information and only 3 percent said they would “definitely allow it.”

It also found that consumers were less worried about giving up their e-mail addresses. Although half of the respondents said they would not want to share their e-mail addresses with the merchant, one-third said they would be “willing” or “probably willing” to do so.

The most visceral reaction was elicited by a question that asked whether consumers would be willing to share “information about you with the stores that you visit, when you are just browsing.” An overwhelming 96 percent said they would “definitely not allow” or “probably not allow” it.

Mobile payment is common in many parts of the world, and slowly gaining acceptance in the United States, particularly with young consumers. A Federal Reserve survey found those in the age bracket of 18 to 44 represented more than two-thirds of mobile payment users.

It is not always clear to users of mobile payment services exactly what kinds of information is recorded and retained by the company that owns the mobile platform – say Apple, in the case of purchases made on iTunes, or eBay in the case of mobile payments using PayPal – or how that is used for marketing purposes.

The researchers wrote that the new wave of mobile payment services could profoundly alter the relationship between customers and those service providers.

“Further,” they concluded, “there is no guarantee that this shift would be apparent to consumers using mobile payments systems to complete sales transactions.”

Facebook allows its users to buy virtual goods with a currency that it calls Facebook Credits. The Berkeley professors warned of the prospect that “social network services with payment systems could add transaction histories to their already rich databases of behavioral information.”