NEW YORK (MainStreet) —Perhaps the epitaph can wait for the old, plastic credit card.

While digital wallet app use is growing, it is doing so slowly. To make matters worse, some are warning the new way to pay leaves many risks.

“I think there are definitely privacy and security concerns,” said Justin Brookman, director of the Privacy Project at the non-profit Center for Democracy & Technology. “These types of transactions allow for a lot more data to be transferred than the traditional credit card transaction.”

There is no denying the use of digital wallet apps — such as those offered by Google and PayPal — are on the rise. A recent report from the research and advisory firm Forrester said mobile payments in the U.S. will grow from $12.8 billion last year to $90 billion by 2017 — with in-store mobile payments making up $41 billion. Even with that increase, however, it only would mean 9% of all e-commerce is done with a mobile device.

The issues concerning care digital wallet apps take with consumers’ personal information took center stage this this March in a report by the Federal Trade Commission on mobile payments. The report highlighted that unlike typical credit card transactions, where the card company does not receive a customer’s buying habit information and the retailer does get contact information — digital wallet purchases often allow for personal data to be garnered by retailers, operating system manufactures, app developers, mobile phone carriers, loyalty reward program administrators and others. The data collected from mobile purchases — such as details on purchases, physical location and personal contact information — can help companies build their own profiles on consumers.

“The use of mobile payments raises significant privacy concerns, due to both the high number of companies involved in the mobile payments ecosystem and the large amount of data being collected and the consumer base for it is growing,” the FTC report stated.

The report reiterated numbers from an earlier Federal Reserve report that 42% of respondents were concerned with data security issues and cited that as the main reason why they have not used mobile payments.

The issues of privacy and security also came under scrutiny last month when an app developer said Google was sending him personal contact information of customers who bought his app from the Google Play app store. The situation made Rep. Hank Johnson (D-GA) look into the privacy notice of Google Wallet and send a letter to Google Chief Executive Larry Page questioning the company’s need to release information like a person’s physical address to any third party.

Google responded in a five-page letter, saying its wallet privacy notice clearly states it “may share your personal information with third parties as necessary to process your transaction and maintain your account,” and “information such as name and email address is necessary for developers to issue refunds, reversals, payment adjustments … and investigate chargebacks.”

Matthew Goldman, co-founder and chief executive of — a cloud-based wallet app that allows consumers to store credit card information in order to see which card they should use for certain transactions based on reward programs — said the public’s acceptance of digital wallet technology comes down to comfort.

“Right now mobile is new to many people,” Goldman said. “People are still comfortable with going to banks and using a credit card, so it takes time.”

Goldman, who’s cautiously optimistic digital wallet use will continue to increase, said the industry does depend a lot on how convenient such a payment method can be made while making consumers feel secure.

“The security issues are likely to become a barrier to mobile payments,” said Chris Jay Hoofnagle, director of information privacy programs at the Berkeley Center for Law & Technology at the University of California, Berkeley.

Hoofnagle said customers currently have too many steps — with having to unlock both the phone and the payment app as security precautions — to make a digital wallet purchase convenient.

“Mobile payments now are just as inconvenient as check writing,” Hoofnagle said. “As with other payment systems, speed will erode security, and it will be interesting to see how the two values balance.”

The FTC report added since mobile payment technology allows for encryption throughout the entire payment chain, the marketplace does offer the potential for increased data security for financial information.

“I definitely think that this technology could be considered safer than using your credit card and may help actually protect people’s privacy,” Goldman said. “I really think it’s going to be convenience that will play a bigger role in market growth.”

And it may be that aspect that is its downfall.

“It’s really not that slow to pay with a credit card, right?” Brookman said. “Do you really want to have search through your phone to pay?”