Comment: How safe is mobile commerce?

As mobile handsets become more prevalent as a tool for retailers, security of sensitive data used becomes increasingly important – both for businesses and consumers.

Considerations, such as how the applications, tools and technologies use and store data and also how users are identified or targeted have become key concerns. Research by Intercede revealed only 18% of consumers in the UK feel confident their use of mobile commerce and smartphone-based payments are truly secure. With that in mind, retailers need to be acutely aware of the technologies available and the existing security risks – both perceived and real – in order to educate themselves, their staff and customers. 

Using mobile wallets, near-field communication (NFC) and apps for couponing and loyalty gives retailers the opportunity to provide customers with a unique and differentiated experience. But consumers are still concerned that paying with or using their mobile phone for coupon and loyalty schemes puts them at risk of identity and data theft. However, when you look at the technology behind mobile it can provide consumers and businesses with greater protection. Below I'll explain several reasons why mobile commerce is considered safe.

International bank grade security standards helps to reduce fraud

The Centre for Economics and Business Research (Cebr) found that some forms of mobile payment actually helped to reduce fraud in the UK because they provided consumers with more control over their purchases and the ability to take action immediately, should, for example,  their phone be lost or stolen. In comparison, the report found that fraud losses on plastic cards stood at £388 million last year, with £68 million of these losses from cards lost, stolen, or intercepted in the post. Card ID theft led to £32 million of fraud losses. Secure mobile payment systems and other similar payments requiring PIN identification have the potential to reduce this type of fraud.

It's important that customers and retailers alike understand the benefits of mobile and the security provisions within the technology. The mobile community is advocating that retailers leverage technology that uses the secure element found in the phone's SIM card. What this means for both consumers and retailers is that they are using international bank grade security standards. In addition, the infrastructure, including the installation of payment applications in the SIM are designed in conjunction with the finance industry and using the SIM doesn't require the retailer to store consumers' card credential.

Protects our digital identity

Consumers are set to only increase using their mobile devices for shopping and every-day transactions. In fact, IMRG & Capgemini found that 27% of all online sales, worth £3 billion, were placed on a mobile device. This also means the amount of personal and sensitive information, one's digital identity, located on mobile devices will grow and be more important than ever to protect.

At the simplest level digital identity is a supplement to the real or core identity of any individual and can range from a single attribute or credential, such as age, to the complex, containing details of a consumer's home or bank account.

With so many different keys to so much personal information available, now more than ever, mobiles have an important role to play in addressing the management of digital identity.

Above all consumers want to be assured that whoever is selling them products and goods is legitimate, reliable and not a person or company phishing for data to exploit. By providing an alternate way to log-in to an app or make a payment using authentication via a mobile device, much like GSMA's Mobile Connect and Twitter's new solution Digits, consumers are able to take back control.  They can decide which information to share. It provides users with security, ease of use and also a positive customer experience.

Identity is not only an issue for consumers, retailers also want to know about customers in order to minimise the risk of fraud and be in a position to better target customers with relevant offers and sell more goods and services. For example, by leveraging digital identity retailers can reduce coupon and loyalty fraud. Customers could use identity with serialised digital coupons to authenticate who they are before using the coupon, ensuring the coupon is used as intended and not copied. Additionally, retailers are also able to use information volunteered from consumers to send them relevant or contextual offers and information, foster engagement and encourage a two-way dialogue.

Over-the-air provisioning

Finally, consumers using their mobile device while shopping, whether in-store or online, have an added layer of protection delivered from their mobile operator. Should a mobile device be lost or stolen all consumer needs to do to virtually shut down their device is to notify their service provider or mobile operator. The operator can close down the SIM using technology enabled through their secured network. This further ensures that customer data is protected and doesn't become privy to fraudsters looking to access valuable personal and financial information.

Paul Crutchley, strategic engagement director at mobile operators association, the GSMA, writes a regular Essential Retail column on mobile technology's influence on retail.

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