On top of its decision to charge customers $5.00 a month to use its debit cards, Bank of America is also taking some heat for its new person-to-person mobile payment application.

As American Banker reported last week, users of the new P2P service on Android devices were unhappy when the mobile application associated with the product requested permission to access their smartphone's contact list. Users were apparently put off by what they considered to be a breach of their privacy.

The American Banker article quoted one reviewer from the Android Marketplace writing, "Contacts permission is disgusting. Fire whomever made this happen."

The access request was actually easily explained by B of A, and was simply meant to make using the application for P2P transfers easier. The bank posted the following note on the Android Marketplace:

"We've launched the ability for our customers in select U.S. states to conveniently make transfers using a phone number or email address (functionality available nationwide in the near future). Our app can populate the transfer recipient's information from the sender's device contact data, but ONLY if users request it during the transfer process. Only the specific recipient's contact information is accessed for the purpose of the transfer (the entire address book is not accessed)."

The B of A incident is a perfect example of how companies looking to deliver innovative mobile payments products are also running afoul of consumers' legitimate fears over the security of their data. Several studies have shown that security concerns are the biggest reason cited by consumers reluctant to embrace mobile payments.

In a study published from research firm StrategyOne earlier this year, nearly half (47 percent) of respondents said that the security of their personal and financial data is a bigger driver to mobile payment adoption than discounts and special offers, while nearly two thirds (63 percent) worried their personal information is more vulnerable making purchases with a mobile device than with a debit or credit card.

In the American Banker article, Aite Group senior analyst Julie Conroy McNelley said the B of A problem was really a matter of poor communications.

"Where people get upset and where privacy groups use these things as a platform is when it's perceived as being done stealthily and without expressed opt in from the consumer," Conroy McNelly told AB. "A lot of it is having an effective communication plan."