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How Security of Mobile Payments Can be Communicated to Encourage Adoption

by Nitesh Patel | Aug 31, 2016

Earlier today I participated on a panel at the Mobile Payments Conference, Chicago, about the importance of security on encouraging mobile payment adoption, along with Chris Otey (CUWallet), Cliff Duffey (Cybera) and moderator Joseph Rodriguez.  

It’s important to put the topic of security into context.  In the consumer research that we have conducted in the US and across Western Europe mobile smartphone owners have told us that security is the number one barrier to them adopting mobile payments.

That’s the case for over 50% of people we have surveyed. It’s also the number one concern across all age groups, particularly in the 25-34 age range, a group we consider to be in the sweet spot for accepting mobile payments.  Our research confirms that the primary security fear relates to the theft or loss of their phones and as a consequence the loss of their bank or card details. These consumers strongly feel that those bank details could then be used to make payments fraudulently.

But of course we know that with technologies such as tokenization and biometric authentication mobile payments are significantly safer than mag-stripe card payments using magnetic stripes.  With Apple Pay, Samsung Pay, or Android Pay you have to have at MINIMUM a PIN to set up.  Though most Apple Pay/Samsung Pay users would use a fingerprint scan, further supported with tokenization to protect users payment data.

All stakeholders in mobile payments need to communicate that mobile payments can deliver added security; the wallet provider, the banks supporting mobile payments, payment networks, banks and even retailers.  Achieving lower levels of fraud should be an incentive for all these players.

Apple correctly focused on Apple Pay’s superior security features when it launched Apple Pay, focusing on the two key areas to address those concerns - payment authentication using biometrics, but also tokenization.   

Apple also recognized the importance of building an ecosystem with the support of the banks, the companies that most consumers have a trusted and existing financial relationship with. Banks that are part of Apple Pay are endorsing Apple Pay as a secure payment service.

At the same time there are certainly some brands that consumers are most likely to listen to when it comes to mobile payments. Not surprisingly, consumers have stated a preference to use the mobile payment solutions of companies that have payment expertise. 

When it comes to which brands consumers trust the most for payments, not surprisingly we see companies that consumers have financial expertise ranking highest; banks and PayPal, followed by payment networks, mobile operator and phone OEMs.  Well publicised hacks of retailers like Target probably haven’t helped retailers’ position as trusted providers.

Payment networks (MasterCard, VISA) and banks could communicate fraud levels as a percent of mobile transactions to demonstrate to consumer that mobile payments are at the very least equally as secure as card-based payments. Banks and payment networks are well placed in the payments chain to see transaction data to support such claims.

One of the interesting highlights from our consumer research is the importance of preloaded payment apps.

We had consumers telling us that if the app was preloaded to the device they would feel more likely to trust the solution. So to some extent some mobile users trusting their device vendor, and possibly the operator, to make sure the apps they have on their device can be trusted.   

Preloaded apps also drive awareness and adoption.  This also presents an excellent opportunity for users to learn about the enhanced security and safety involved in using mobile payments as opposed to traditional forms of payment.  All mobile payment applications should provide concise and easy to digest information on how it is more secure for the user when they initially set it up on their phone.  Recent entrant in to the mobile payments game WalMart Pay did exactly this.  They provided high level information on why their payment service is safer with an option to gain more information on “Why Wal-Mart Pay is so safe.” Other mobile wallets should follow its example.

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