Owning a business in today’s technological world includes doing business online and offering the option of mobile payments, a trend expected to account for $60 billion in transactions by 2016 according to eMarketer. However, before you make the leap to this technology, there are some things to consider. Here are 4 things to know before accepting mobile payments:
Thieves are getting cleverer as technology is getting better. Instead of stealing debit and credit cards, they now hack into an existing payment account and steal that information, according to Chief Products Officer, Alisdair Faulkner, who works at ThreatMatrix, a San Jose, California online security firm. Businesses today are liable for any fraudulent payments that are processed, and mobile payment services are usually linked to more than one payment source, such as a credit or debit card. Whenever a transaction occurs on a smart phone, it gets charged to one of those payment sources registered to the account owner.
Unfortunately, there are no federal statutes other than the FTC (Federal Trade Commission) Act that protect either consumers or businesses from fraudulent practices using pre-funded accounts or stored-value cards, such as gift cards or pre-paid debit cards. Since these cards can also contain malware or other potentially damaging viruses, when they are swiped, they can pick up a business’s or consumer’s account information without the knowledge of the merchant or card user. It’s vital that if you do start accepting mobile payments that you have a clear, strict policy on fraud, and that specific protections are put in place to prevent it.
Consumer Account Privacy
Out of the 4 things to know before accepting mobile payments, this one is the hardest to put into practice. Protecting consumers from identity theft, and yourself from lawsuits, should take top priority. As an entrepreneur or company owner, you need to think about protecting your customers’ account information. Incorporating effective privacy practices, consumer choice, and transparency into your sales practices will garner trust with consumers, and will also protect them and you from third-parties seeking to utilize the information for their own agendas.
Other players not typically involved in traditional payment systems are also involved in the game. These include mobile phone carriers, operating system manufacturers, application developers, hardware manufacturers, and coupon and loyalty program administrators. Companies need to implement reasonable data collection and security practices with those entities in mind as well.
To protect you and your customers, you need to consider what types of data encryption to implement. The FTC suggests using an end-to-end data encryption service, along with dynamic data authentication, which allows for unique payment information for each transaction. There are a number of procedures for encryption, including secure storage of information and the authentication of data. Even though the FTC doesn’t require these procedures, there is enough concern to highly suggest them for protection purposes.
What’s in it for you
The last of the 4 things to know before accepting mobile payments is how accepting mobile payments can benefit you, as a company? One financial benefit is saving in credit card processing fees. Another is the opportunity for your company to work with a mobile payment service provider, implementing your promotions into its technology. The downside to this is the need to purchase all new point-of-sale hardware.
Most experts don’t expect mobile payment systems to take off for another 2 to 3 years, so now is the time to figure out in what direction your customers are going. The consensus is that mobile coupons, reading reviews before buying, and researching items are the trends consumers are adopting, so offer them to your customers today!
About the author: Kristen Gramigna is Chief Marketing Officer for BluePay, a credit card processing firm offering Android credit card reader for mobile processing capabilities. She brings more than 15 years of experience in the bankcard industry in direct sales, sales management, and marketing to the company and also serves on its Board of Directors.