Security breaches continue to impact American consumers. Whether it’s credit card fraud, the hacking of a major national retailer, or compromised social network passwords, security of personal information is an ongoing concern. It’s estimated that more than 30 percent of Americans have been victims of bankcard fraud in the past five years. Some experts believe that the longer U.S. consumers rely on the antiquated technologies inherent to today’s credit and debit cards; fraud incidence will continue to rise.
Some new mobile payment technologies have been proven to be more secure than the magnetic stripe technology used with existing credit and debit cards because they are based on EMV, which is widely used in Europe. However, payment types such as these are just preparing to enter the U.S. market.
As new payment types and mobile wallets converge on the marketplace, it’s predicted that mobile payment usage will continue to rise. But, will consumers willingly adopt mobile payments? According to industry research from leading analyst firm, Gartner, “Consumer survey data shows that security of payment data is the top barrier that prevent consumers from making payments through their mobile phones.”*
While early adopters are already using mobile payment applications and wallets from companies like LevelUp, PayPal and Google, the masses remain skeptical and security is one of their primary concerns. The concept of a ‘digital wallet’ generates fear around possibilities of data interception. There is also a concern around the smartphone serving as a central repository for banking and credit card information. For example if a cell phone were lost, what would prevent someone from using the wallet or mobile payment applications to make purchases?
One thing to remember is that many of the same security risks are present today with traditional payment types as evidenced by the earlier statistic around fraud. Some would argue that the chances of someone losing a physical wallet are greater than their digital wallet/smartphone. And, there are other basic security measures consumers can take as they begin the journey into the world of mobile payments.
- Always have a PIN on your smartphone and change it frequently
- Use payment applications that requires verification (PIN debit)
- Use an application that issues an immediate email receipt
The payment ecosystem is going mobile. This evolution will benefit the customer and the merchant with additional convenience, financial savings and an improved merchant-customer experience.
* Gartner, Inc., Industry Research, Distinguish How Consumers Want to Shop on Their Mobile Devices for the Best Investment Decisions, Mim Burt, October 14, 2011.