May 21, 2012 |
Mention mobile payments and the first thing that comes to the mind of most is “that sounds dangerous!”. Money, mobility ad malfeasance necessarily intertwined themes, and yet I’ve long believed that for mobile personal technology security will play out in exactly the opposite of what we expect: as something that prevents rather than promotes bad things (”identity theft” for example) from happening to good people.
Obviously new channels bring new forms of fraud, yet mobile money can serve to both victimize or protect. Consider:
- Smartphone owners encounter 35% more fraud*
- 43% of all fraud is first detected by the consumer who was victimized (and self-detection is positively correlated with lower losses)
Our annual ID Fraud surveys have shown a steady trend toward effectiveness in self-empowerment. Just three years ago, more fraud was self-detected by victims who reviewed paper statements (with all that data sent “in the clear”). Now the proportion of fraud self-detected through electronic methods far exceeds that of paper*.
Over the past four years there has been a tripling in the percentage of consumers are ready to take security in their own hands**. It’s obvious that mobile is the penultimate interactive device, and I expect that professionals in the field of both security and marketing will eventually harness this for good. For mobile payments to take off, we need to take more of those core banking notifications and controls and push them out to the end user. As we do so in a way that preserves the usability it’s my belief that security will become the primary selling point for mobile payments, far outstripping convenience as a motivating factor.
People *should* worry that their phone can be a source of security and fraud incidents, and yet if we outwit criminals by using technology to route back-end analytics, location-based authentication and much more we can turn the safety argument on it’s head.
Ultimately, the deployment of mobile will result in more fraud at some financial services companies and yet I believe that the good will outweigh the bad. It’s all about how the technology is deployed, and banks must take care to avoid marketing slogans that aren’t supported by actual empowering safety capabilities. I can tell a bank or technology vendor gets the difference by how well their security, fraud, marketing and channels people speak the same language.
Security and mobile payments? They are the perfect combination and yet the way they fit together varies not only on perspective, but actual implementation.
*Source: 2009-12 Identity Fraud Survey Report, sponsored by Fiserv, Intersections and Wells Fargo
**Source: Javelin financial services channels survey, 2009-12