Many fear the potential security risks posed by utilising mobile payments, but Jason Carey, founder of mobile payment solutions company, SwipePay, explains why mobile payments should be embraced and not feared.
Public trust in the UK banking sector is at an all-time low, so it’s no wonder that people are wary of mobile payments and the fast approaching ‘cashless society’. This ‘cashless society’ would see a move away from tangible currency towards mobile payment apps and devices and according to 65% of tech experts, it is estimated that this transition will have taken full effect by 2020.1 So how is it that only 5% of consumers are currently taking advantage of the contactless payment method?2
Earlier this year, Channel 4 revealed that card readers, built into mobile phones as standard, can be adapted to access data from Barclays contactless bank cards. More recently it has been revealed that the Royal Bank of Scotland (RBS) debacle, which left over 10 million NatWest and Ulster Bank accounts unable to send or receive payments, was caused by a poorly executed system update. It stands to reason that consumers would be reluctant to adopt this unfamiliar technology, but what are the main hurdles to overcome before widespread adoption?
There are concerns that using mobile payments could leave consumers more exposed to fraud and the theft of financial information. However, by integrating with the existing Chip & PIN solution, mobile payment apps actually add extra layers of security and encryption to each transaction. For example, the contactless nature of mobile payments removes the chance of your details being stolen through skimming (obtaining a customer’s card details by illegally scanning the magnetic strip) because your physical card is not used in the transaction.
In addition, ATM machines are now beginning to be equipped with mobile payment options. This is bad news for card-cloners as it removes the need for consumers to physically put their card into the machine and enter their PIN on the keypad.
Fear of Change
The fear of the unknown is only natural. However, it is important to remember that mobile payment technology is a relatively new venture for banks and organisations in the UK, there are bound to be teething issues. Take Chip & PIN for example. There was an initial suspicion that this, more secure and convenient form of payment, was actually a way of the banks removing any liability for instances of card fraud. Chip & PIN systems are now commonplace in the UK retail industry and accounted for over £87 billion worth of transactions in the first quarter of 2012.3
Mobile payments are a faster and more convenient option. Removing the need to slide your card into a reader or count out cash cuts down on transaction time and streamlines the whole process. The majority of mobile payment apps also provide a money transfer function, enabling consumers to easily exchange money with other individuals from any location. Furthermore, consumers utilising mobile payments will benefit from targeted deals and offers.
It can’t do everything a credit card can
With a variety of mobile payment options being offered by banks and other organisations, it is understandable that consumers may feel that they are limiting themselves by committing to just one. Contrary to this, there are mobile payment options now on the market that turn a smartphone into a ‘virtual wallet’. This ‘virtual wallet’ allows the user to load all credit, debit, store and gift cards onto a smartphone app and use any of them for in-store, on-line and ATM transactions — providing a completely universal mobile payment solution.
For more information visit www.swipe-pay.com