(iTers News) - As mobile wallets are in vogue, how to secure users’ banking information and authenticate their ID and passwords are becoming the toughest challenge in the rapid proliferation of mobile money transaction system. To tackle the challenge, scientists at IBM have developed a NFC, or near filed communications technology-based new mobile authentication security system, paving the way for adding an extra layer of security when using an NFC-enabled device and a contactless smartcard to conduct mobile transactions, including online banking and digital signatures when accessing a corporate Intranet or private cloud.

Called as two factor authentication, the technology took a conceptual cue from today’s mainstream two-factor authentication methodology which is in widespread use in PCs to ask users to type in both a password and a verification code sent by short message service or SMS. IBM Scientists in Zurich has applied the same concept using a personal identification number or PIN code and a contactless smartcard.

The working theory is straightforward. For example, users simply holds the contactless smartcard next to a NFC reader of the mobile device and after keying in their PIN, a one-time code would be generated by the card and sent to the server by the mobile device.

The IBM technology is based on end-to-end encryption between the smartcard and the server using the National Institute of Standards & Technology (NIST) AES (Advanced Encryption Standard) scheme. Current technologies on the market require users to carry an additional device, such as a random password generator, which is less convenient and in some instances less secure.

The technology, which is available today for any NFC-enabled Android 4.0 device, is based on IBM Worklight, a mobile application platform that is part of the IBM MobileFirst portfolio.

"Our two-factor authentication technology based on the Advanced Encryption Standard provides a robust security solution with no learning curve," said Diego Ortiz-Yepes, a mobile security scientist at IBM Research.

According to market research firm ABI research, NFC devices in use will exceed 500 million in 2014. By 2017, there will also e be 1 billion mobile phone users who will use their devices for banking purposes.